Trump 2nd Term

Jul

2024

Is THE Top in For Stocks?

By Graham Summers, MBA | Chief Market Strategist

Editors note: Chief Market Strategist Graham Summers, MBA will be on the Schilling Show radio program today at 1:30 EST. You can listen in here.

Everywhere I look, I see investors proclaiming that “THE” top is in and a bear market is about to unfold.

First and foremost, there is NO reason to ever try to call a top.

Why?

Because doing so doesn’t make you any money. In fact, top callers usually miss out on major market gains by selling way too early.

Consider what happened during the last market correction in April 2024. Then, just as now, the top callers came out of the woodwork. The market corrected for two weeks before rallying another 15%. Anyone who sold, missed out on these gains.

Moreover, there are nearly ZERO signs from real market indicators that THE top is in right now.

Consider the last major bear market that unfolded from early 2022 until October 2023. At that time, high yield credit broke down along with stocks, signaling that a major shift had taken place in the financial system.

Today, high yield credit is near all-time highs. If anything, it is signaling that stocks have sold off TOO MUCH!

The same is true for market breadth. Going into the bear market of 2022, breadth peaked before stocks.

Today, breadth is near all-time highs. It too is signaling that the selling is overdone for stocks.

Finally, and likely most importantly, the U.S. is four months away from the next Presidential election. And the next President of the United States, Donald Trump, is obsessed with the stock market.

Do you REALLY want to be shorting stocks when the single biggest cheerleader in the history of the stock market is going to take office?

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Best Regards

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Jul

2024

These Are the Two Charts You NEED to See Today

By Graham Summers, MBA | Chief Market Strategist

This correction is close to over. And when it ends, stocks will rally hard to new all-time highs.

How do I know this?

Because the market internals are telling me.

Historically, high yield credit leads the stock market. The reason for this is because high yield credit (read: junk bonds) is MUCH more sensitive to macro changes due to the fact that when the economy rolls over, junk bond investors typically lose a LOT of money very quickly.

Because of this, high yield credit acts as a kind of “canary in the coal mine” for the financial system. If something BAD is coming, this is the first area to react.

High yield credit (red line in the chart below) just hit new all-time highs. Indeed, based on high yield credit, the S&P 500 should be north of 5,600 right now. This is NOT bearish for risk assets including stocks.

High yield credit isn’t the only market internal that suggests stocks are ready to rip higher.

Overall breadth has bounced hard after hitting new all-time highs. The below chart is telling us that the S&P 500 is being dragged down by big tech, but overall market breadth is getting STRONGER not weaker.

Again, this is NOT bearish. Indeed, if we go by breadth (red line in the chart below), the S&P 500 should be 100 points higher right now.

I suspect part of the reason why market internals are acting so strongly is because the market is discounting that the next President of the United States will be Donald Trump, who is obsessed with the stock market.

If you’ll recall, the former President promoted the stock market almost non-stop during his first term. Indeed, he tweeted about it an average of two times per week, mentioned it in the media dozens of times, and even pumped it higher by leaking economic developments any time it looked as if the markets would break down.

Put simply, Trump is a stock market cheerleader, and I believe the stock market is discounting a second Trump term. This will benefit certain sectors and stocks more than others. And those investors who are properly positioned stand to make potential fortunes.