What Would You Do If You Weren’t Afraid?

MarketCycle Wealth Management

 

Published on 08/23/2020

I just keep saying it… we are in a strong and brand new bull market that will run for years to come.  Yes, there will be some pullbacks, but most will be of around 5-10% and last for a few weeks; a small and temporary pullback is no big deal.  The market always zig-zags on its way up, as I never tire of saying.  The majority of the time we will just keep grinding higher and higher and at this point, it will be record high after record high, perhaps for the next decade.

We have to remember that stocks are not the economy, or the news, or the virus, or the election, or politics, or one’s personal fears.  Stocks represent your partial ownership in a publicly held corporation.  Whether you like it or not, mid-to-large sized corporations just received, either directly or indirectly, $-TRILLIONS from taxpayers.  They are shored up and strong and raring to go.

As I just reviewed the hundreds of charts that I look at every single day of my life, I came across some things that stood out:

  1. As I predicted in private client emails, the S&P-500 has just made new record highs.
  2. The recessionary bear market is now officially over and the Federal Reserve should acknowledge this fact sometime around December.
  3. Stocks now need to jump over their final hurdle which is the psychological barrier of ’round numbers’… the S&P @ 3400.  On Friday, the S&P-500 got as high as 3399.97 before it backed off and it is likely to surpass this 3400 mark any day now.
  4. Near-term, stocks are a bit overbought and longer-term, stocks are definitely overbought which merely means that volatility may increase a bit over the next few months.
  5. Sentiment is currently too bullish and the stock market may pull back sooner rather than later.
  6. So, the stock market may, after passing 3400 on the upside, then correct back down through 3400 and towards 3280-ish (as I wrote to clients in a private email) and this would be natural and normal and short lived.  Despite volatility, stocks would eventually proceed higher and to new record levels.
  7. Over the coming months, the S&P-500 naturally wants to move up toward 3600.
  8. Breadth is still strong, so this is not just a bull market of a few stocks… it has broad participation.
  9. Small-cap stocks are still showing weakness (investors are spooked by possible bankruptcies).
  10. Value stocks are still showing extreme weakness.
  11. Developed and emerging market stocks are still showing weakness relative to the United States.
  12. Of emerging market economies, China and Korea are showing the most strength and Mexico the most weakness.
  13. Of ex-US developed market economies, Canada and the U.K. are showing the most strength and Spain the most weakness.
  14. The U.S. stock market still leads all others in relative strength.
  15. In the United States, growth and momentum stocks are showing continued strength.
  16. Technology is overbought, but still showing an incredible amount of relative strength.  It will likely lead stocks higher over the next decade.
  17. The USDollar (USD) is still, as I type this sentence, in a bull market… but just barely.
  18. Gold is still showing strength, but its upward path will now be much slower and more volatile (but gold bullion is still worth owning especially since it is a protective asset; it tends to go up when stocks go down).
  19. Consumer cyclicals (things that you don’t actually have to buy, like televisions) are finally showing strength over consumer staples (things that you do have to buy, like toothpaste), and this is bullish.
  20. Inflation has been rising for the past 6 months and very few market analysts seem to acknowledge this fact.
  21. Treasury-bonds are breaking down and yields are rising because of increased inflation.

RISK?  The following is taken from our paid member’s website… MarketCycle Wealth REPORT

MarketCycle’s proprietary system of indicators correctly called the high risk period in advance and then we called the exact March top and then the exact bottom and we also called a “V” shaped stock market recovery when everyone else was still running for the hills.  And since early February, MarketCycle’s “RISK ASSESSMENT” section on our REPORT website has gone from a sea of RED (WARNING & BEARISH) to a sea of GREEN (BULLISH):

 

 

And where are we in the repeating (business) market cycle?  If you look to the far right (pale green upward line), we likely still have about 9 years left to this new bull market before any major slowdown (this period is likely to be similar to 1991 – 2000 and with S&P-500 price gains of around 20% per year and technology stocks leading the way).  But sometime around 2029, I expect a (red line) recessionary downturn that will be dramatically worse than any shown in this chart.  But that is still a long, long way off (and yes, I do have evidence that backs up this prediction).

 

So, there is currently lower than normal risk AND a brand new stock bull market just started that, in my opinion, will climb longer & higher than anyone now expects.

So, the question is:  “What would you do if you weren’t afraid?”

 

 

 

 

 

 

 

MARKET CYCLE  —  DUAL MOMENTUM  —  LOW VOLATILITY  —  TREND FOLLOWING  —  HEDGE FUND

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MarketCycle Wealth Management | Stephen Aust
MarketCycle Wealth Management, LLC is a Registered Investment Advisor. Information presented is for educational purposes only, is not considered an individualized recommendation or personalized investment advice, may not be suitable for everyone and does not intend to make an offer or solicitation for the sale or purchase of any securities. All investments involve risk and unless otherwise stated, are not guaranteed. Past performance or performance charts are not a guarantee of future performance. Portfolio performance charts are shown net of fees so the management fee, brokerage fees, trading fees and ETF fees have already been subtracted. Current performance may be higher or lower than that shown and differing accounts may show different results. Investment returns and principal value in client accounts will fluctuate. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Be sure to consult with a tax professional before implementing any investment strategy.