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the amount of money going into US Stock
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Market ETFs recently hit $150 billion a
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number that's only been reached once in
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the last decade in 2021 this is right as
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the main us stock market index the S&P
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500 is making a record advance so far in
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20124 being up so far over 26% at the
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same time something called the PE ratio
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of the stock market is reaching Heights
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that's also only been witnessed once in
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2021 and once in the late 1990s this PE
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ratio is ultimately a measure of how
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expensive the stock market is at any
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given point and it shows us that the
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current pricing of the S&P 500 Index is
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in the 90th percentile of the last 40
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years and many analysts news outlets
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experts are calling this an irrational
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Market or even worse an irrationally
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exuberant market now you'll notice that
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some of these news headlines actually
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date back to February of 2024 if we look
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at when that was on the S&P 500 Index
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that was right here the index has moved
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moved up by another 18% since then in
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fact if we zoom out to see December of
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1996 we also know that Alan Greenspan
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who was the head of the Federal Reserve
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at the time called the stock market
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irrationally exuberant and indeed it
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looked like the stock market was
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excessively bullish heading into
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December of 1996 having moved up by over
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60% over the course of 2 years but look
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at what happened after he made his
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speech the S&P 500 continued to move
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higher for another 3 and A2 years double
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in in price and he wasn't the only one
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the entire way up very intelligent
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people were calling the stock market
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dangerous as the saying goes the market
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can stay irrational for longer than you
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can remain solvent and that definitely
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applies to the stock market today ever
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since the movie The Big Short came out
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people have been trying to act like
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Michael bur and bet against the stock
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market but meanwhile the S&P 500 has
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continued to steadily climb higher so
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who is the dumb money today the people
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selling stocks or the people piling into
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US Stock Market ETFs by the way there's
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not much time left to take advantage of
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our Black Friday offer if you want to
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have access to our entire trading
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strategy including alerts for all of the
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trades that we participate in make sure
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not to miss this offer believe it or not
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the exact same forces that drove the
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huge rally in the late 1990s are present
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today we have a real economic growth
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today that is hovering at around 3%
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that's smack down in the middle of the
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range where economic growth was in the
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1990s during this incredible bull market
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in stocks in fact all of the periods
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where economic growth was around these
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levels led to huge bull markets in
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stocks that's why in our opinion the
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biggest risk to the stock market today
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is a recession because that brings down
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economic growth and can cause
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considerable declines in stocks one of
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the big things that we're watching for
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with our clients is the state of the US
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job market this is a chart showing
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initial jbless claims in the United
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States and it's updated weekly so it
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provides a live view of the state of the
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job market and one of the typical things
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that you see heading into economic
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downturns is that initial jobless claims
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begin to pick up in the few months
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before the recession actually starts by
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the way these recession bars here are
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simply the official NBR recessions now
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if we zoom in a little bit closer into
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what's going on today we see that
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initial jobless claims have actually
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been moving down over the last few weeks
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and overall they've generally been going
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sideways over the last year or so not
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something that's indicating an imminent
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recession now if we superimpose
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something called the yield curve on top
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of initial jobless claims first of all
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we see that it's almost a perfect
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indicator of where the job market is
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going next and all of the moments where
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the yield curve has been inverted
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throughout history has been closely
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followed by a pickup in initial jobless
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claims so to us this time is not
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different and we are going to see
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initial jobless claims begin to pick up
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but we want to see the actual data begin
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to point in that direction for now
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initial jobless claims are behaving in a
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very similar way to previous stable
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economic periods again all moments where
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the stock market was generally moving
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higher so for now although there are
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signs of a recession economic growth
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seems to be relatively stable but there
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is a second big similarity between today
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and the late 1990s and that's what the
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Federal Reserve is doing the US Central
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Bank ever since mid 2023 they've kept
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their interest rates stable and even
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lowered them very slightly as you can
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see that's very similar to what they
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were doing in the late 1990s now as long
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as economic growth is stable this type
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of stability in interest rates is
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allowing stock market investors to get
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very excited now back here the stability
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in interest rates was primarily fueled
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by steadily declining levels of
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inflation in the United States this is a
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line showing the core Consumer Price
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Index which is one of the preferred
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measures of inflation for the central
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bank and back here the fact that core
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inflation was steadily declining allowed
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the Federal Reserve to do what they did
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today we've also seen core inflation
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move down substantially over the last
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couple of years which again has allowed
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the FED to do the same thing they were
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doing in the late 1990s now as you can
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see there's been a slight tick up in
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inflation recently and for the first
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time really since 2022 and this is
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already getting a lot of people very
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concerned about the possibility of the
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Federal Reserve needing to raise
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interest rates again which would stop
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the bull market and stocks dead in its
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tracks but if we rewind to the 1990s we
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can see there were many temporary picks
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up in core inflation but they didn't
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derail the overall downwards Trend in
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inflation and this is what we've been
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telling our clients for the last year
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our research has been suggesting that
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inflation should head down and that
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continues to be the case today why yet
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again we were advocating to buy this
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recent dip on the S&P 500 because we
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just don't have any signs yet that the
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bull market we've been in throughout
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2024 is coming to an end now we did send
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out last week a quick notification for
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clients saying that institutional money
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managers are leveraged long right now
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now from the data that we're looking at
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and that does increase the odds of a
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little bit of short-term volatility in
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the market now to be clear we're not
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making an outright call on a market
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correction right now like we have before
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but we've generally rebalanced our
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trading portfolio to make sure that
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we're accounting for this risk today our
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portfolio of Trades is extremely
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Diversified we are currently long on
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crypto which is really not always the
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case we've been taking advantage of the
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strong momentum on crypto which is the
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only moment you want to be long on
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crypto to is when it has momentum and
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those positions have been doing
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incredibly well we've been long on
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Turkish stocks over the last few weeks
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that trade has been playing out nicely
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we have trades on Malaysian and Chinese
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stocks as well both of these have been
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dipping recently and could end up having
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been fantastic buying opportunities we
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also recently bought the dip on a
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uranium Miner called nxe because we
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could be about to see a resumption of
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the bull market in uranium prices part
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of our allocation is dedicated to us
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utility stocks that sector is one of the
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only parts of the US market that
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actually looks reasonably priced today
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and it also has fantastic technicals
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which is a combination that is very rare
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to find in today's market and then we
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have a bunch of other traits that we
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like so far in 2024 we've had 104 trades
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68 of them have been winning trades and
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36 have been losers you can check out
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our close trades on our homepage if you
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don't want to miss the next ones make
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sure to take advantage of the Black
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Friday offer that we're doing this week
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we never do these types of discounts so
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don't miss your chance
