'Perfect' Stock Market Says Sell Now Before Storm

This is source I found from another site, main source you can find in last paragraph

5) Sentiment – The majority of people still hate this market. Even the bulls are scared. You can see it every time we have a short-term selloff. Sentiment indicators spike to extreme bearish levels and many people RUSH for the exits. They do this by either selling positions, buying puts, shorting stocks, buying those toxic VIX products, or raising cash. For example, the Thursday before Hurricane Irma hit Florida, the CBOE Index Put/Call ratio hit its highest level in 7 years! The media made it out like Florida would fall into the ocean and the end of the world was near. If you don’t believe me about the current skepticism, go ask 10 random people what they think of the stock market and you’ll see exactly what I’m talking about. I understand that no one wants 2008-09 to happen to them again, but this constant fear is a generational mentality that will take a long time to change and could be another reason why the market continues higher over the longer term.

6) Pro-business Government – The mainstream media constantly undermines President Trump and tells the public that he won’t get anything accomplished for the next four years. Any progress made by the government is not priced into the market and could be a significant catalyst over the next few years. This includes progress in corporate tax reform, personal tax reform, health care reform, tax cuts, repatriation of foreign money, and infrastructure plans. For example, a reduction in the corporate tax rate can add $10-$15 in earnings to the S&P 500 and easily spark a 10% move higher. You might be thinking “What if nothing gets done?” The stock market can still perform well because of the amazing inventions that continue to revolutionize our lives (which I discuss in the next section). Right now, the concept of less regulation and a more business friendly government is fueling strong optimism among many business leaders.

7) Technology Revolution – For the past 100 years, the market’s pattern has been approximately 15-20 years of an economic boom followed by 10-15 years of a downturn or consolidation. This current cycle looks to have started with the new highs created in 2013 and could last for many years. 

These cyclical uptrends are usually led by new inventions that revolutionize our lives, enhance productivity, and completely change the way we do things. In our current market, this includes smart phones, autonomous cars, machine learning, artificial intelligence, and the “Internet of things.” Experts estimate that we will see over 50 billion connected devices by 2020. These tremendous changes in technology are helping companies to drive growth and increase profit margins.

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Courtesy: Joe Fahmy

Here’s the catch: The move higher will not be easy. There will be corrections, shakeouts and pullbacks along the way. Many of them will be sharp and VERY convincing that the Bull Market is over. For example, even during the great bull market of 1995-2000, there were big corrections in 1997 and 1998 during the Asian economic and Russian debt crises. In fact, the correction in Sept/Oct 1999 had many people (including myself) thinking the bull market was over…right BEFORE it recovered and went on one of the most amazing six-month runs in market history! The biggest challenge for investors will be navigating through this. In other words, it will require a good balance of taking profits along the way up and having conviction during the corrections.

There is one final point I would like to make: In my 20 years of experience, I’ve learned that moves in the stock market can go on for much longer than we expect, however, I am NOT a blind bull. If I am wrong about this call, I will simply cut losses because capital preservation is ALWAYS the number one priority for my clients. One of my biggest strengths is my ability to make decisions and change my mind when market conditions call for it. If you think I’m being too optimistic about my call, remember that two things are almost always true: 1) The world keeps getting better and 2) The people always think it’s getting worse.

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

This is source I found from another site, main source you can find in last paragraph

Source : https://nz.finance.yahoo.com/news/perfect-storm-7-factors-send-markets-higher-175715727.html



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