American Consequences - August 2020

80,000

Advance/Decline Line

75,000

70,000

65,000

The same fall happened before the Great Recession

60,000

2007 Feb Mar

Apr

May

Jun Jul

Aug Sep Oct

This indicator peaked in mid-2007. And when the market made its final peak a few months later in October, the advance/decline didn’t follow suit. That was a subtle but powerful tell about the health of the stock market. And we all know what happened next... Stocks crashed more than 50%. This is an incredibly powerful bear market indicator with an impressive track record. And despite how scary it might seem out there today... it’s giving this new bull market a green light. It’s possible that we could see a repeat of the black swan crash of February and March. But the first crash happened because the virus took the market by surprise. Now, the market is looking forward. It has digested the fears. All kinds of stocks are moving higher. The rally is broad and healthy. And that means it can continue higher.

During the craziest part of the dot-com boom, very few stocks were driving the rally higher. The advance/decline line peaked in early 1998. And by the stock market peak in 2000, it had fallen to multiyear lows. Again, most stocks were falling... but the biggest and most important stocks were pushing the index higher. That’s the definition of an unhealthy market. And when you see it in real time, it means a bust is a near certainty. The same thing happened during the housing bust. Dr. Steve Sjuggerud predicted the rise of gold in 2003, the top of the dot-com bubble in 2000, and the bottom of the Great Recession in 2009. Now, this former hedge-fund manager says a mania will hit the U.S. stock market any day now... one that’ll take most people by surprise. Don’t get left behind – get the details here .

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August 2020

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