Luke Lango Issues Dire Warning

A $15.7 trillion tech melt could be triggered as soon as June 14th… Now is the time to prepare.

Tue, June 6 at 7:00PM ET

Is This Bull Market the Real Deal?

Bullishness is back! … overwhelming bearishness has turned into heavy buying … Louis Navellier says this rally is real … is crypto about to surge? … Eric Fry’s extraordinary performance this year

Bullish spirits have descended upon mom-and-pop retail investors over the last two weeks, just in time for Halloween.We can look toward the massive buying of single stocks, as opposed to ETFs or index funds, for confirmation. These single-stock purchases often have the fingerprints of retail buyers. And to say the buying frenzy has been fierce is an understatement.From Bank of America equity strategist Jill Carey Hall:

Over the last three weeks, inflows into single stocks (as a % of S&P 500 mkt. cap) were in the 99th percentile of history since ’08 and two standard deviations above average, and still in the 92nd percentile excluding corp. client buybacks.

Translation: People can’t get enough of stocks right now.Is that bullish or a bearish contrarian indicator?Let’s return to Hall’s note for some context:

Prior times 3-wk. single stock flows as a % of mkt. cap were this extreme were followed by above-avg. S&P 500 returns over the subsequent 1/3/6/12 months (i.e. wasn’t a contrary indicator).But as a caveat, most prior instances of extreme (+2 st. dev.) inflows following the Global Financial Crisis typically were preceded by extreme (-1 st. dev.) outflows in the several months prior – not the case this time.Cumulative $ inflows YTD have also been the most positive in our data history.

So, unfortunately, the data don’t provide a clear takeaway. Yes, historically, this quantity of buying has been a good thing for forward returns. But recent market conditions don’t match past market conditions, so it’s not an apples-to-apples comparison.What we do know is that sentiment is incredibly powerful. And despite some earnings-based selling pressure in tech as I write early-afternoon, sentiment has swung back in favor of the bulls in a big way.

Emotional extremes cut both ways

Massive bearishness produces massive bullishness. And we’ve certainly had massive bearishness.From Bloomberg, a couple weeks ago:

Look no further than retail traders for a picture of pessimistic sentiment toward US equities, with bets on declines outnumbering wagers on gains by more than three to one. Small-lot options traders — those buying no more than 10 options contracts at a time — snapped up $19.9 billion worth of puts to open last week while purchasing only $6.5 billion in calls to open, data compiled by Sundial Capital Research Inc. show. “I don’t think people really appreciate what’s happening in the options market right now,” Jason Goepfert, the firm’s chief research officer, said in a tweet. “This is the first time in history that puts were 3x calls.”

That degree of bearishness must be released. It’s like an inflatable beach ball, pulled deeper and deeper under the water. At some point, the pressure is too great, and the beach ball explodes back toward the surface.

Is that explosion what we’ve been seeing in the stock market recently?

The put-option buying referenced above is a form of shorting the market – in other words, betting stocks will fall in price. When the market rises in the face of these short bets, it inflicts massive pain on these bearish investors.When that pain gets too excruciating, they “buy to close” their positions. But that buying just adds more fuel to the bullish surge, hurting other short-sellers. They’re then forced to close their positions by buying their shorted stock which sends the market even higher. Rinse and repeat.To what degree have burned short-sellers been aiding our recent bullish surge?For that, let’s go to legendary investor, Louis Navellier. From this week’s issue of Accelerated Profits:

The fact is we’ve experienced six significant short-covering rallies this month – and as we discussed in Special Market Podcasts, this historically signals the end of a bear market.In case you’re unfamiliar with short-covering rallies, they occur when investors who own put options or have shorted select stocks run for cover. And, as I mentioned, this has happened six times in October.Our friends at Bespoke point out that the S&P 500 had fallen 25% from its previous highs before October, and there have been nine similar pullbacks since 1928.Here’s what’s exciting: Recent action in the S&P 500 matches these historical occurrences – and after these pullbacks signaled a bottom and the market rises, a big turnaround occurs.In fact, the S&P 500 goes on to post an average gain of 15.2% in the following month, an average gain of 31.6% in the following three months and an average 33.2% gain in the following six months.What this tells me is that the rally is real, and we’re in the midst of a massive market rebound.

A moment ago, we were on the fence about whether the recent, huge mom-and-pop buying was bullish or bearish. Louis’ analysis certainly tips the scales toward “bullish.”

Meanwhile, one asset class which has not been enjoying “a massive market rebound” is crypto

To be fair, bitcoin has popped about 9% since Sunday, trading at 20,830 as I write.But we’ve seen this before. The grandaddy crypto has traded between $18K and $21K for months now without staging a sustained breakout.But that doesn’t mean a breakout isn’t coming.For more on that, let’s go to our crypto experts, Luke Lango and Charlie Shrem of Ultimate Crypto:From their Saturday update:

It was yet another mostly flat week for cryptos, as Bitcoin continued to hover around the $19,000 level amid mixed macroeconomic developments.The ostensible appearance is that cryptos are consolidating right now before their next big move. We think that’s exactly what’s happening, and we believe that next big move will be higher.Indeed, we’re so confident in that call that we are – for the first time in over 9 months – thinking about adding new cryptos to the model portfolio to position ourselves for “Boom Cycle 2023”!

Luke and Charlie’s bullish case boils down to the following roadmap…Cryptos are a hedge against money-printing, and a major risk-on asset…Given this, they perform well when monetary policy is loosening, and perform poor when monetary policy is tightening…Monetary policy has been tightening all year long, resulting in crypto pain…But macroeconomic tides are nearing an inflection point with easing inflation, a cooling economy, crashing asset prices, and overall financial stress…This paves the way for a Fed policy pivot…In 2023, tightening will turn into loosening, and at the first real sign of this happening, cryptos will explode and enter a new boom cycle.Luke and Charlie believe we’re close enough to this turning point that they’ve put together a special presentation on the opportunity. They’re going live with it tomorrow at 4 PM ET.From Luke:

…We’re at a turning point.The same metrics that allowed me to detect the crash [that Luke predicted in April 2021] are now indicating that it’s time to buy back in. Because in the months ahead, we could see the right cryptos soar by 10x or even 20x.At this stage, you just need to know what to buy. That’s why today, I want to offer you an invitation to our upcoming Crypto Insider Summit.

Luke and Charlie will detail the crosswinds impacting the crypto sector today, discuss what to buy, and highlight how to profit.They’ll even name their #1 token to buy right now, just for joining them at this free event.You can reserve your seat right here.

Finally, we end today with a huge “congratulations” to Eric Fry and his Investment Report subscribers

It’s one thing to recommend stocks that perform well in a rising-tide-lifts-all-boats bull market.But it’s the brutal bear markets that separate the best-of-the-best analysts from the pack.On that note, we’re thrilled to spotlight the performance of Eric’s Investment Report portfolio over the past 12 months.Over a period in which the S&P has fallen nearly 16%, the Dow down 11%, and the Nasdaq off 27%, Eric’s Investment Report recommendations are…positive.As of this past Friday 10/21, they clocked in at a 12-month return of +0.40.From Eric:

It’s hard to pull out the confetti when we’ve weathered one of the most tumultuous years for the market in recent memory.But the truth of the matter is, if you can survive the tough times, you’re in a perfect position to thrive when conditions improve.

Compared to how most investors are doing this year, Eric and his Investment Report subscribers are certainly surviving.As to thriving, I’m going to embarrass Eric by mentioning how 11 of his dot-com bust recommendations from the late 1990’s went on to produce gains of 1,000% or more. And more recently, Eric’s winners coming out of the Covid market meltdown include:

  • The VanEck Semiconductor ETF, which closed at +121%…
  • The Korea Fund, which closed at +102.5%…
  • And Daqo New Energy, which closed at +148%.

There’s plenty more we could highlight, but we’ll stop it there so we don’t run too long.Bottom line: A huge congratulations to Eric and his Investment Report subscribers on this fantastic performance.Have a good evening,Jeff Remsburg

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