The S&P 500 has now performed back to back “90% up days”.
A 90% up day is a day in which 90% or more of the stocks that comprise a stock market index rise. Historically, this is a very bullish development. And back to back 90% up days are even better! In fact, back to back 90% up days like the ones the S&P 500 staged on Friday and Monday are usually a hallmark of a market bottom!
As Ryan Detrick has noted, since 1980, two consecutive days with 90% advancing issues in the S&P 500 have resulted in positive returns 12 months out ~91% of the time. Even better, the median return over that time period is 16.5%.
See for yourself:
Put simply, a major metric is signaling to us that the odds greatly favor stocks have bottomed . The odds favor a rally, NOT a crash.
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On Friday, stocks experienced their largest single day gain of 2025. Friday was also a 90% up day: a day in which 90% of stock trading volume was upwards. This, along with several other metrics, is signaling a bottom is in and a bounce has begun. The bigger question is if this is a dead cat bounce or the start of a significant rally.
The markets are a lot like a rubber band: while they can stretch one way or the other and sometimes will reach extremes… but those periods usually resolve with a “snap back” move that brings the market more in line with its normal range, just as a rubber band will snap back from an extreme stretch to its normal resting position.
For stocks, one means of reading the degree of “stretch” is to chart the percentage of the index that is trading above or below the intermediate term trend: the 50-day simple moving average (DSMA).
When a large percentage (over 85%) of stocks are trading over this line, it usually means stocks are overbought and due to correct. Conversely, when a low percentage (below 40%) of stocks are trading above this line, it usually means stocks are oversold and forming a bottom.
You can see the latter phenomenon in the chart below. Anytime less than 40% of stocks in the S&P 500 are above their 50-DSMA, the market usually bottoms soon after. Bear in mind, this is correct in every market environment whether it be during a bear market and a correction that occurs in the context of a bull market.
So what is this metric saying today?
Only 30% of stocks in the S&P 500 are currently trading above their 50-DSMA. This is a strong signal that stocks are extremely oversold and likely forming a significant bottom. Remember, the last five times this low of a percentage of stocks were above their intermediate term trend, stocks kicked off a multi-week rally.
Put simply, a major metric is signaling to us that the odds greatly favor stocks bottoming right here and now. This is the only chart to focus on this week as the media and fintwit are all extremely bearish and calling for a crash.
The odds favor a rally, NOT a crash.
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This might be the most brutal 10% correction in history. But the good news is that stocks should bottom shortly.
From a purely gain/ loss perspective, the overall indices are only down 10%. However, “under the hood” the damage to the stock market has been severe. The MAG 7 stock, which account for 30% of the S&P 500’s weight, are down ~20%.
As awful as this correction feels, in many ways this was to be expected. We are in the 3rd year of this bull market begun in 2022. Historically, the 3rd year is the most challenging one for bull markets. And with the S&P 500 having recorded truly incredible gains of ~20% in both 2023 and 2024, stocks were due for some increased volatility at least in the first half of 2025.
Put simply, this current period for stocks, while painful, is to be expected. It is not unusual, nor should we panic. And by the look of things, the lows are in or about to be in.
The Tech ETF (XLK) is at MAJOR support. It would be EXTRAORDINARY for it to take out this line right here and now.
Moreover, the ratio between growth and value stocks has fallen to test its 40-Week Simple Moving Average (the same as the 200-Day Simple Moving Average). This has historically marked THE lows for market pullbacks during this bull market begun in late 2022.
In the simplest of terms, ALL of the froth has been taken out of the markets. And with the inflation data, GDP and labor market cooling, the door is open to the Fed starting to ease monetary policy again.
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You know your economic model is doing a terrible job when you watch it blow up in a matter of days. Recently, investors got a taste of that with the Atlanta Fed’s GDPNow measure.
GDPNow is meant to be a real-time (rather than backwards looking) measure of economic activity. It’s a major “go to” tool for investors looking to monitor if the economy is expanding or starting to collapse.
I bring all of this up, because the GDPNow measure entered a free-fall in late February, with its growth rate plunging from 2.9% to NEGATIVE 2.8% in the span of just one month.
Seeing this, investors panicked, believing the economy was entering a recession at a rapid clip. I have little doubt that this contributed to the aggressive sell-off we’ve been seeing in stocks since late February.
There’s just one issue with GDPNow’s collapse: it’s 100% bogus.
It turns out that gold imports to the U.S. rose rapidly during this time from $13 billion to $36 billion, and the GDPNow model inaccurately took this to mean that the trade deficit was exploding which it interpreted as bad news for the economy.
Don’t believe me?
The Atlanta Fed issued a series of statements on X last Friday, in which it admitted that without this screw up, the model would show the economy was still growing by 0.4%, NOT collapsing by 2.4%!
See for yourself.
Talk about a screwup! The economic model that you tout as being one of if not THE best real-time measures of GDP proved to be practically worthless. Sorry to all the investors who saw this and panicked, thinking the U.S. was in recession!
If you’re looking for a high octane tool to determine whether or not to “buy the dips” during market correction, my proprietary Crash Trigger has got you covered. It tracks certain key developments that register before every major market meltdown.
I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.
Yesterday, I commented that it was “bounce or big trouble” time for stocks.
The reason for this? The S&P 500 had fallen 5% to test its 200-day simple moving average (DMA): a critical trendline for the bull market.
What made this a critical situation? After all, a correction of this size (5%) is a relatively common occurrence. On average stocks drop by 5% at least once per year. So this should have been a clear “buy the dip” opportunity, right?
Not exactly.
Under the hood, the market was in a very precarious situation. Only half of its sectors remained in uptrends. Moreover, many individual companies had seen their share prices decline by 20% or more.
Put simply, while the overall indices were only down 5%, beneath the surface, stocks were trading like it was the start of a bear market. As a result of this, the test of the 200-DSMA was absolutely critical. If stocks didn’t bounce there, then we needed to prepare for a real bloodbath in the markets.
Fortunately, we got the bounce with the S&P 500 hitting its 200-DSMA briefly on an intraday basis before buyers came in.
What now?
Stocks are up this morning, but we need to see some follow through on this bounce. After all, one day of gains isn’t a big deal for stocks. So while the bounce has helped, questions remain as to whether or not it will be sufficient to stop the downward momentum.
The good news is that high yield credit, which usually leads stocks, has NOT broken down in any significant fashion. This suggests that stocks could catch a major bid if they can look past the threat of tariffs and a trade war to the fact that underlying macro conditions have not worsened much if at all.
If you’re looking for a high octane tool to determine whether or not to “buy the dips” during market correction, my proprietary Crash Trigger has got you covered. It tracks certain key developments that register before every major market meltdown.
I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.
The S&P 500 is getting into some serious trouble now.
Bounces are short-lived, lasting at most a day… bulls are refusing to commit… and the breakdown is now reaching serious levels from a technical analysis perspective.
To wit, the S&P 500 is now 2% below its 10-week simple moving average (this is the same as the 50-day simple moving average). During the last four years, the only time stocks have broken down more relative to this line was during the bear market of 2022 or at THE 2023 lows.
Put another way, stocks are at a critical point in this sell-off. Either stocks hold here and begin a significant bounce or the market dynamic has changed dramatically to the point of looking more like a bear market as opposed to a garden variety correction.
See for yourself.
Indeed another way of looking at price action is to note that the S&P 500 is now on the verge of breaking below its bull run trend line from the 2023 lows. This has happened once before during the August 2024 meltdown, but stocks need to catch a bid right here and now if things aren’t going to get REALLY messy.
Seeing this, many investors are asking themselves “are stocks about to Crash?!?”
To figure that out, I rely on certain key signals that flash before every market crash.
I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.
Stocks got saved over the weekend when President Trump announced that the U.S. would be moving forward with its plans for a “Crypto Reserve” that would own multiple cryptocurrencies.
The specific post from Truth Social is below:
This post served several purposes for risk assets. The most significant are:
It ignited a sharp rally in crypto currencies.
It served as a kind of “Trump Put” on risk assets.
Regarding #1, the crypto space has been in decline for the last two months largely as investors became disillusioned with the progress the Trump administration was making in introducing crypto-based government funds. Bitcoin, the largest and most liquid crypto currency, had taken out critical support and was on the verge of erasing its entire post-election gains.
President Trump’s post on Truth Social reversed all of this, sending Bitcoin back into its former range. In the simplest of terms, crypto is back on the administration’s list of priorities. The next major bull run in crypto coins is likely here.
Which brings us to #2 in our list: President Trump’s post on Truth Social served as a kind of “Trump Put” on risk assets.
One of the hallmarks of Trump’s first term was his near constant tweeting/ talking about stocks any time the markets were in danger of breaking down in a major way. Thus far in Trump’s second term, these interventions have been absent even as stocks broke below their bull market trendline last week.
President Trump’s post on Truth Social was a clear signal that the “Trump Put” is back. In the very simplest of terms, Trump is watching the markets and intervening when risk assets get into trouble.
The big question for investors is… will this work? Up until Trump intervened the markets were breaking down in a Big way, with some risk assets crashing 20%+ in a matter of days.
Put simply, are stocks about to Crash?!?
To figure that out, I rely on certain key signals that flash before every market crash.
I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.
The markets are setting up for a big test. If they fail, we’re in for some REAL fireworks in stocks. I’ve been bullish on stocks for most of the last few weeks, but yesterday’s price action, combined with how the weekly candles are setting up, is changing everything.
The MAG-7 stocks have declined to test their 40-week (same as the 200-day) simple moving average. This has held during every pullback in the last two years. If it doesn’t hold here, then we’re in for a rough patch that will last several weeks and possibly months.
The S&P 500 is now in the process of erasing ALL of its post-election gains. The “Trump bump” is gone, and stocks have failed to make any money for four months.
The economically sensitive Russell 2000 has already taken out its 40-WSMA. This might be the UGLIEST chart for the stock market bulls. Unless this reverses right here and now, this chart is suggesting that the bull run begun in late 2023 is OVER.
Finally, the totality of stocks over the totality of bonds ratio (ITOT:IGOV) has broken below its 50-DSMA and is heading towards its 200-DSMA. This tells us it’s time to shift capital to income plays/ bonds and out of stocks as we’re entering a significant “risk off” period.
All of the above point to stocks having an UGLY patch in the near future. The big question now is whether or not they will crash. To answer that, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
For all the excitement around the election, the stock market has in fact gone nowhere for most of the last five months. Instead, stocks have been trading in a range between 5,750 and 6,100 on the S&P 500. Sure, there have been sharp daily moves lower and higher, but as a whole stocks have done NOTHING for months.
Indeed, even the fact stocks appear to be holding up this well is something of a mirage. The reality is that the S&P 500 is heavily weighted towards big tech (the largest tech companies account for 30% of the index’s weight). These are the largest, most profitable companies in the world. And they’re masking the reality that the vast majority of stocks are in fact having a terrible time.
When you remove the impact of big tech from the market with an equal weighted version of the S&P 500, the reality is that most stocks peaked in December and are down about 5% from their recent peak.
This raises the question… where is the Trump stock market miracle?
Historically, Trump has been a champion for stocks, but the reality is that they’re barely up since the election.
What is going on here?
I’ll detail what I think is happening in tomorrow’s article. But unless stocks rally hard right here and now, we’re in for a rough spring.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
By now you’ve no doubt heard that the Department of Government Efficiency (DOGE) is uncovering a truly jaw-dropping amount of fraud, waste, and abuse in the U.S. Federal Government.
Some of the more egregious items:
The government effectively funds the media via backdoor grants and subscriptions. We’re not talking about small amounts either, we’re talking about $8 million for Politico, $1.6 million for the New York Times, and millions for the Associated Press.
The United States Agency for International Aid (USAID) has been spending $50 billion per year financing countless causes that are of questionable value, e.g. gender-based plays in Peru, DEI scholarships in Burma, sex changes in Guatemala, tourism in Egypt, etc.
To be clear, all of this is wasteful spending that needs to go. But the big questions are:
Will this really put a dent in the U.S. deficit?
What are the implications for investors?
Regarding #1, the fraud, waste, and abuse DOGE has uncovered thus far, while infuriating, is nowhere near the $1.8 trillion deficit run by the U.S. each year. Of course, it’s still very early in this process (the Trump administration is only in its 3rd week), but the fact remains, DOGE has a LOT of work to do to put a major dent in the U.S.’s $1.8 trillion deficit.
By way of context, USAID, which DOGE has just shut down, had an annual budget of $50 billion. That sounds like a lot of money, but it comes to just ~2% of the U.S.’s deficit. So again, DOGE needs to cut a LOT more spending to really put a dent in the U.S.’s finances.
Which brings us to #2: what are the implications for investors?
Historically, betting against Elon Musk has been a bad bet. The man has single-handedly changed auto manufacturing as well as space exploration. And he has stated that he intends to cut $1 trillion in spending before he’s done.
Now THAT would be significant. And while the media and Wall Street are in disbelief that Musk can do this, the bond market is flashing a signal that Musk could very well succeed.
To wit, bond yields peaked in early 2025 just before DOGE and Musk began their work. This is a major signal that bonds were beginning to wake up to DOGE’s potential: reducing the U.S. deficit would be VERY bullish for Treasuries.
Bonds are not the only asset class being impacted by this. Please note that stocks stopped correcting THE day that Treasury yields peaked. They then launched a “rip your face off” rally with the S&P 500 rising 300 points in a little over a week.
Bottomline: the potential impact of DOGE on the stock market is NOT being correctly discounted by the majority of investors. This kind of mispricing can open the door to incredible gains with the right investments.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
One of my favorite leading indicators is high yield credit or junk bonds.
Junk bond investors are extremely sensitive to macro changes. The reason for this is that they are investing in an asset class that has a high likelihood of default. As a result of this, these investors need to be extremely attuned to any changes in the economy/ fundamentals because failing to do so can result in losing most if not all of their money.
For this reason, high yield credit tends to lead the stock market. I say “tends” because nothing in investing is flawless. But this indicator is about as good as it gets.
Case in point, during the recent tariff tantrum, stocks (black line) collapsed while high yield credit (red line) held up beautifully. This was a clear signal that a prolonged tariff war was unlikely or… that it would have minimal damage to the U.S. economy.
Sure enough… the tariff war was postponed by 30 days and stocks bounced hard. High yield credit was correct once again! And since that time, high yield credit is suggesting that new all-time highs are coming shortly. Consider that a “freebie” in terms of stocks insights.
This is just one of the signals I use to take advantage of mispricing in stocks. Feel free to add it to your arsenal!
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The tariff wars have officially arrived. And the markets don’t like it.
Crypto currencies are perhaps the best liquidity/ risk on indicators in the financial system. And as I write this, they’re a sea of red.
Bitcoin is down almost 7% peak to trough from Friday afternoon. Other smaller coins are down even more.
And there is little doubt stocks will open sharply down on Monday. The S&P 5o0 fell almost 100 points Friday afternoon when the tariffs announcements hit the wires.
Trump believes the stock market is a barometer for his economic agenda. And while he’s already suggested there will be some near-term pain based on the tariffs… how long will he be willing to stomach a collapsing stock market?
The S&P 500 has a gap down around 5,860. This should prove a likely downside target for this market reaction to the tariffs. What happens then will be key.
Below that is the 200-Day Simple Moving Average (DSMA) around 5,600 on the S&P 500. It is highly unlikely Trump would stomach a break below that.
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There were three primary reasons for this. By quick way of review, those reasons were:
Reason #1: There was a brief “tariff war” between the United States and Colombia. The issue was resolved rapidly, but it introduced a degree of policy uncertainty and/ or fears of tariffs being introduced in a flippant fashion. The markets don’t like uncertainty.
Reason #2 : A Chinese company Deep Seek, claimed it has created an artificial intelligence (AI) software that is as good, if not better than comparable technology in the U.S. for a fraction of the cost. However, this information has been public since November, so it’s not clear why the markets would suddenly care now as opposed to any other point in the last two months.
Reason #3: Japan’s central bank, the Bank of Japan (BoJ), raised rated for the third time since 2007, thereby blowing up its carry trade (again).
Japan’s currency, the Yen, funds a massive carry trade (a process through which investors borrow in one currency with a low interest rate to invest in higher returning assets). To “cover” a carry trade, an investor needs to sell the higher returning asset (in this case, stocks) and return the borrowed money.
Of the above issues, #3 is the most important one for risk assets. Indeed, a similar situation unfolded in August 2024 when the BoJ raised rates and stocks sold off aggressively, plunging 9% in the span of two weeks.
It’s worth noting that stocks bounced back from that situation rapidly, undoing ALL of the losses in a little over a week.
We expect a similar snapback rally this time around as well.
Remember, fundamentally nothing has changed in the macro environment. The economy is growing. The Fed is easing. And the President of the U.S., Donald Trump, is a stock market cheerleader. The big picture hasn’t changed for stocks. What has changed is a higher degree of uncertainty has appeared in the markets.
At Phoenix Capital Research, we view this correction as an opportunity, NOT the start of a market crash or bear market.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
You should NOT be alarmed by this. There are three primary reasons for this sell-off is occurring. None of them are true “game changers” indicating that the bull market in stocks is over.
Those three reasons are:
Reason #1: There was a brief “tariff war” between the United States and Colombia over the latter initially refusing to accept planes returning illegal immigrants from the former.
Despite this issue being resolved rapidly (Colombia buckled), this situation introduced a degree of policy uncertainty and/ or fears of tariffs being introduced in a flippant fashion. The markets don’t like uncertainty, especially for policies that can hurt global trade or the economy.
Reason #2: Japan’s central bank, the Bank of Japan (BoJ), has raised rated for the third time since 2007.
Japan’s currency, the Yen, funds a massive carry trade (a process through which investors borrow in one currency with a low interest rate to invest in higher returning assets). The BoJ raising rates threatens this carry trade which is believed to be worth tens if not hundreds of billions of dollars in size.
To “cover” a carry trade, an investor needs to sell the higher returning asset (in this case, stocks) and return the borrowed money. A similar situation unfolded in August 2024 when the BoJ raised rates and stocks sold off aggressively.
Reason #3 : A Chinese company Deep Seek, claims it has created an artificial intelligence (AI) software that is as good, if not better than comparable technology in the U.S.. The significance of this development is that Deep Seek claims it was able to do this for a fraction of the cost.
This claim is absurd, but the markets appear to be taking it seriously with shared of the tech firms involved in the A.I. buildout in the U.S. (Nvidia, Meta, Apple, etc.) down 5% or more this morning. Here again, this issue introduces uncertainty (in this case uncertainty as to whether U.S. tech firms are overspending on their AI buildouts) and the markets don’t like uncertainty.
As a result of these issues, the markets are a sea of red today, with the S&P 500 down 2.3% and the tech-centric NASDAQ down 4%.
The reality is that none of the above issues is likely to end the bull market in stocks. However, combined, they are creating a volatile situation that appears to have “come out of nowhere.”
Do NOT panic.
Corrections of 5% or even 10% are a regular feature of bull markets. The fact that the S&P 500 managed to pass through 2024 without single 10% correction does NOT mean that we’ve entered a new period for stocks that is without downside risk
So where will this drop end?
The S&P 500 left three separate gaps during its sharp 300-point rally that occurred over the course of just five trading sessions during the week of January 13th. It would not be unusual for at least one if not two of these to be “filled” during a back-test of this recent rally.
Why are we not panicking?
The macro picture for stocks has not changed. The economy is growing. The Fed is easing. And the President of the U.S., Donald Trump, is a stock market cheerleader. The big picture hasn’t changed for stocks. What has changed is a higher degree of uncertainty has appeared in the markets.
At Phoenix Capital Research, we view this correction as an opportunity, NOT the start of a market crash or bear market.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
Yesterday I shared a chart that helped us to determine that the S&P 500’s correction was a “buy the dip” opportunity, NOT the start of a serious correction/ bear market.
By quick way of review…
1) The chart showed the percentage of S&P 500 companies trading above their 50-day simple moving average (DSMA). This is a GREAT tool for tracking where the market is trading relative to its prior trend.
2) Prior to last week’s rally, the reading on this chart had fallen to ~15%.
3) A reading this low is typically associated with significant market bottoms. Indeed, the only times the reading has fallen lower during the last five years was during the pandemic crash or the major bottoms of the 2022 bear market.
You can review the chart below.
I sincerely hope all of you bought the dip. If you did, you’ve made a significant return on your trade as the S&P 500 has ripped higher by 280 points in the span of a single week.
Our research indicates this move is just getting started.
High yield credit typically leads the stock market. The reason for this is that high yield credit investors are typically more sophisticated/ sensitive to macro changes for the simple reason that they are investing in bonds that have a high probability of default. As a result of this, high yield credit can give clues as to where stocks will be heading.
The short answer today is “UP, A LOT.”
The high yield credit ETF (HYG) is back at its all-time highs. This strongly suggests stocks will be moving sharply higher from here.
Ultimately, it all comes down to this: as investors, our goal is MAKING MONEY.
To do that, you NEED to know when to “buy the dip” and when to get out of stocks to avoid bear markets. And the best way to do that is to use real quantifiable tools, not opinions, that tell you when to get out to the markets.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
Ignore the doomers, there is ALWAYS a profit to be made somewhere.
Because of a 5% drop in the last two weeks, the overall stock market, as measured by the S&P 500, is effectively flat since election night. Put another way, stocks have gone nowhere for two months straight. Worse still, the S&P 500 is clearly forming a Head and Shoulders topping pattern.
Seeing this, the doom cloud is proclaiming that the market is forming THE top for this bull market begun in 2022. Perhaps this is true. I doubt it. None of my proprietary market timing tools are registering that this is THE top or even a major top.
Moreover, in investing, the REAL money isn’t made in timing a top. It’s made in following market leaders. And while the S&P 500 has done nothing for the better part of eight weeks, certain key sectors of the markets are EXPLODING higher.
I mentioned Quantum Computing as a key sector to watch in mid-December. This area of the market continues to EXPLODE higher with some names like Rigetti Computing (RGTI) up QUADRUPLE digits.
Quantum Computing isn’t the only area of the market showing massive returns. Robotics is another area of the market that has begun to ignite upwards. Nauticus Robotics (KITT) is just one play that is up triple digits in the last few weeks.
And then there are drones. Here again numerous names are exploding higher producing triple digit gains in the last few weeks alone. Mobilicom Limited (MOB) is just one such name that has proving the “there’s no money to be made in stocks” narrative incorrect.
These are just a handful of market leaders. But there are more. Many more. So feel free to listen to the doomers who tell you the market is done. But you’ll be missing out on a lot of great opportunities in the markets.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
The overall index is holding up relatively well, but “beneath the surface” a bloodbath is unfolding.
High yield credit breaking down quite badly. As I write this, it is signaling a pullback in the S&P 500 to at least 5,850.
Breadth, which also typically leads the S&P 500, is signaling something similar: a decline to roughly ~5,800.
The bad news doesn’t stop there either. Only two sectors out of the 11 that comprise the S&P 500 are positive in December. They are: Consumer Discretionary and Tech. The other NINE are all red for the month thus far.
Put simply, the only reason the S&P 500 is holding up is due to a handful of large tech plays that receive a tremendous amount of weight in the index. When you remove the impact of these companies by referring to an equal-weighted S&P 500, it’s clear a bloodbath is unfolding.
How deep will this correction run? We’ll address that in tomorrow’s article.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
Last week I warned that that the Fed would be spooked by the uptick in inflation.
In particular, I noted that the CPI had begun turning up after effectively flatlining for six months. See for yourself.
The incoming Trump administration has made it clear that it sees the Fed as a political entity that favors the left. In this context, Trump sees any uptick in inflation as 100% the fault of the Fed.
As I warned last week, this meant the Fed was likely to disappoint the markets at its Wednesday meeting, resulting in stocks getting slammed lower. Specifically, I warned that the Fed would get spooked by the inflation data, that it would pull back on its intended rate cuts in 2025, and that this would result in stocks getting slammed downward as investors panicked.
And that is precisely what happened.
The S&P 500 experienced one of its worst down days in years, falling nearly 3% and wiping out all of its post-election gains. Most investors panicked and sold the farm as they believed this was IT as far as the bull market was concerned.
I didn’t.
This was a BUYABLE dip as I alerted subscribers of our stock/ ETF-trading newsletter Private Wealth Advisory in last week’s market update.
Why?
Our proprietary research told us that the markets would correct but that it was a buyable dip that would quickly rebound into year-end. And that is precisely what is unfolding as I write this.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
Stocks have broken above critical resistance on a weekly basis. Historically, this has lead to several months’ worth of gains. As I write this, the S&P 500 is backtesting the breakout.
High yield credit, which typically leads stocks is showing no signs of slowing down. It has turned up again and anticipates the S&P 500 breaking above 5,750 in the near future.
Breadth is also strengthening. This bull market rally is getting broader, NOT narrower. And here again, there are no signs of a collapse about to begin. This is a “buy the dip” moment for stocks.
I bring all of this up because a LOT of analysts have gotten bearish. Their clients have MISSED out on these gains! Don’t be one of them!
To avoid making the mistake of panicking during a garden variety pullback, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
You are going to hear a LOT of people talking about this, saying it’s a sign that the economy is in recession.
It’s not.
This business cycle, is unlike any other. If you’re comparing what’s happening now to what happened in 2000 or 2007, then you’re comparing apples to oranges.
Was the economy shut down prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Did the Fed and Federal Government pump $11 trillion into the financial system in the years preceding the Fed’s decision to cut rates by 0.5% in 2000 or 2007?
No.
Did the U.S. experience an inflationary storm prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Comparing the Fed rate cuts and their implications today to the last two times the Fed cut rates by 0.5% without accounting for these differences is not just bad thinking… it’s actually BAD for your portfolio.
Why?
Because in 2024, the economy is NOT rolling over into recession, nor is the financial system showing any signs of duress. GDP growth is clocking in at 2%+.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
Again, what’s happening today is NOTHING like what happened in 2000 or 2007. If your guru or strategist is telling you to sell the farm and prepare for a crisis, you need to FIRE THEM and get a copy of my How to Predict a Crash investment report, instead.
How to Predict a Crash uses a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
