Pro Tip: Don't Argue With The Market
Investors,
On a relative basis, stocks are rebounding on their 200-day MA cloud vs. Treasuries.
Why is this important?
Because it indicates that market participants aren’t afraid of an imminent recession. If they were, the opposite would be happening, such that stocks would be falling relative to Treasuries and breaking below key support levels. As far as we can tell, the simple fact is that stocks are in an uptrend relative to Treasuries, which is indicative of healthy risk appetite and confidence in corporate earnings.
But maybe that confidence is misplaced and the market is wrong.
Maybe!
Someone could’ve argued that the market was wrong in 2020, 2021, 2022, 2023, and so far in 2024! In fact, many folks did make this argument, suggesting that stocks would crater and the economy would collapse.
So how have stocks performed during this period?
These are the total cumulative returns for the S&P 500 since the start of each year:
Returns since 2020: +89.98%
Returns since 2021: +60.5%
Returns since 2022: +23.9%
Returns since 2023: +52.3%
YTD returns for 2024: +20.7%
Factually, telling the market that it’s wrong has been a bad idea.
Maybe it was right in 2022, as stocks had weak returns for 11 months; however, stocks continued to outperform Treasuries during that period & we didn’t have a recession!
Today, I’m seeing a lot of terrible commentary going viral on X.
The “analysts” who have been wrong for years are trying to convince their followers that the Fed’s latest round of rate cuts is signaling a recession, or that rate cuts will not be sufficient to accelerate the economy, or that credit growth isn’t strong enough, or that the savings rate isn’t high enough, or that the labor market is cracking, or that inflation is going to reaccelerate, or that the un-inversion of the yield curve will create the worst economic conditions since the Great Depression.
These are the same folks who said that rate hikes would cause a recession.
These are the same folks who said that credit growth is too weak for an expansion.
These are the same folks who said that reliance on credit meant consumers were weak.
These are the same folks who said that savings were too high to stimulate spending.
These are the same folks who said that the labor market was cracking 2+ years ago.
These are the same folks who said that inflation wouldn’t be able to decelerate.
These are the same folks who said that the inversion of the YC signaled a recession.
I’m not highlighting these inconsistencies for the sake of bashing those analysts, but rather to encourage each of you to think critically about who you’re listening to and who you’re letting shape your views on the market.
If someone has been consistently wrong and they continue to double-down on failed narratives or even shift to a hypocritical narrative with the same bearish conclusion, why is that someone who deserves your attention today?
As the saying goes, “a broken clock is right twice per day”.
Eventually, the U.S. economy will have a recession.
That’s just a fact about the business cycle!
But when does that recession start, how long will it last, and what do stocks do until then and during the recession?
The last person in the world I’d ask is someone who keeps getting things wrong…
“Hey, I know you’ve missed all of the key trends and haven’t made money in this market for a long time, so what do you think I should do now?”
Imagine…
In the remainder of this report, I’ll highlight and share the top charts on my radar right now across the stock market and for Bitcoin and crypto. In total, this report contains 27 new, exclusive, and original charts with commentary, conclusions, and the key implications that you need to know.