THE 2020 MELT UP BLUEPRINT
3,000
We appear to be in the late innings of a great bull market... And as history shows, the fastest gains come in the final innings.
The S&P 500 Index
2,800
Stocks have had four major falls since 2015
2,600
2,400
2,200
2,000
1,800
2016
2017
2018
2019
I can’t guarantee a massive move like that again, of course. But I do believe that the coming years could resemble the late 1990s. We appear to be in the late innings of a great bull market... And as history shows, the fastest gains come in the final innings. Why am I so confident? There’s one major reason. To put it simply... stocks are acting a lot like they did back in the 1990s. Stocks fell dramatically late into that bull market... And then they soared dramatically to new all-time highs. We’re making new highs today. And there are plenty of other similarities this time, too. Let’s take a closer look at these Melt Up setup conditions this time around... STOCKS HIT A FEAR EXTREME... AND THEN RISE DRAMATICALLY In the past couple years, we’ve seen four major pullbacks. And each major pullback led to major extremes in fear.
You can see them clearly by looking at the above chart of the S&P 500... Stocks fell in late 2015, at the beginning of 2016, and again once more in February 2018. (We’ll get to the most recent fall in a minute.) In all three of those cases, the short-term downside was 10%-plus. Those were the first 10%-plus declines in stocks since 2011. But that wasn’t the end. 2018 looked like it was back on track after February. But by the end of the year, stocks started a rollercoaster dive. From the end of September to the end of December in 2018, stocks lost nearly 20%. It was a kick in the gut. Investors had gotten used to consistent gains and easy money in the previous four years. But stocks showed a crack in their armor, and that caused a major spike in fear. How do we define fear? It’s more challenging than you think – you’re trying to put a number on a human emotion.
18
December 2019
Made with FlippingBook Publishing Software