Shades of the dot-com ‘Melt Up’… The two most important charts in the world right now… Patterns too similar to ignore… The ‘what if’ scenario… The rest of the world is struggling with COVID-19… How to put out a Tesla fire… Someone get this video on the blockchain…
It’s time for some ‘chart art’…
If you read our two-part Masters Series question-and-answer session last weekend with Ten Stock Trader
editor Greg Diamond (here
), you’ll likely have a head start on today’s discussion…
You see, Greg is a technical analyst by trade. He makes buying and selling decisions based more on numbers, historical patterns, and what a particular stock, index, or sector’s “chart” looks like… than say, the fundamentals.
As Greg says, all he cares about is price and time.
This might not be the best approach for everyone, but he has found that it works for him. It’s how he ended up trading up to $900 billion a day on Wall Street before his 30th birthday… and joining us at Stansberry Research back in 2017.
At times, I (Corey McLaughlin) have heard what Greg goes described as “chart art.” It’s a very fitting description to me…
Like any art, sometimes a chart is pretty, and sometimes it’s ugly…
Sometimes it’s also overly complicated, depending on the analysis… (And of course, these days, sometimes it also could go for millions as a non-fungible token! But I digress.)
It’s simple… compelling… and worth any investor’s attention today.
In short, today, Greg is seeing shades of the “Melt Up” to the ultimate peak of the dot-com bubble back in the late 1990s. Remember, the stock market didn’t peak back then until 2000. People loved tech stocks for a long time… until they didn’t.
As Greg wrote in his weekly market outlook on Monday, the performance of the Nasdaq Composite Index over the past year or so is eerily similar to the years before the dot-com bubble burst…
For one, the size of the COVID-19 crash last March (33%) and the Long-Term Capital Management (“LTCM”) collapse-fueled stock selloff in 1998 are exactly the same. From Greg…
Here is the Nasdaq Composite Index from 1998/1999…
And here it is in 2020/2021…
Both time cycles saw a 33% drop, a nearly identical 115% rally before a correction, and around the 267th trading day, both broke to new highs.
Greg called these the ‘two most important charts in the world right now’…
In late 1999, the market rallied 75% from the “breakout” point, as Greg said. The jury is out on the market in 2021, but he says the price action last week in the Nasdaq was just as strong.
Of course, the other thing to consider is that a chart of past performance does not guarantee any future performance. We’ve said that over and over about technical analysis.
It’ll tell you what most likely could happen… not what will happen. The key to making the approach work is the “risk management” part, as Greg emphasized in Sunday’s Masters Series discussion.
To us, though, as Greg told his subscribers, when we see these charts…
The nearly identical moves in time and price are too much to ignore.
That brings us to the ‘what if’ scenario this time around…
When Greg blended this starting point with the rally today in stocks and compared it to the rally coming out of our previous crisis-of-the-decade back in 2009, he saw more similarities…
Take a look at the Nasdaq Composite Index from the major low in 2009…
As you can see, from the March 2009 low, the Nasdaq rallied 100%. And as Greg said…
On the 285th trading day of that rally (April 26, 2010), the market experienced the start of a severe 19% correction which included the famous “flash crash” – the major indexes tanked 9%-10% in one day.
This is where it gets interesting…
Guess what date is 285 trading days from the COVID-crash low on March 23, 2020?
May 10, 2021.
As you know, I’m looking for a market inflection point around this time frame.
It could be a continuation and breakout like 1999, or like in 2009, the start of a larger correction…
This is a “make or break” point worth paying attention to.
Today, we see some indications that the market is overdue for a “correction” – which, as regular readers know, we consider at least a 10% drop from a previous high.
For starters, as DailyWealth Trader
editors Ben Morris and Drew McConnell wrote yesterday, the most recent American Association of Individual Investors (“AAII”) survey of mostly “mom and pop” investors shows people are far more bullish than usual
More than half (53.8%) of voters expected stocks to be higher in the next six months, versus a historical average of 38%. That was slightly lower than last week’s 56.9% bullish reading. But in either case, it’s clear that folks are very bullish today.
The important thing to note here, as Ben and Drew said, is that you generally want to bet against this crowd…
You’ll find extremely high levels of bullishness before corrections (including the dot-com bust and 2008’s credit crisis). And you’ll find extremely high levels of bearishness before big rallies (including the 2002 and early 2009 recoveries).
Putting two and two together – extreme bullish sentiment in a bull market and historical patterns that suggest the market could break either way soon – what Greg told his subscribers next made perfect sense to us…
Greg went on to apply his style of ‘risk management’ on either scenario…
We can’t give away all the details here. But based on his indicators, just know that Greg is watching the 3,850 level in the Nasdaq as a key “inflection point.”
And he has a plan for how to trade this setup either way, as he told Ten Stock Trader subscribers on Monday…
I won’t speculate on a big top coming as the trend is up, fiscal and monetary support are still in play, and the 1999 time cycle in the Nasdaq is too exact for me to ignore.
But if the market is set to follow the 2009 script, we have a good idea of when that will be and how far the correction could go.
It’s always good to know where things could go wrong…
For now, I’m staying with the breakout and keeping it simple until proven otherwise.
To get all the details on what Greg is talking about… why May 10 will mark an inflection point for the market… and the specific moves you can make to trade whichever direction the market goes… be sure to check out Greg’s latest presentation right here
Tonight is the last chance to take advantage of the current offer to gain instant access to all of Greg’s research in his Ten Stock Trader service… So don’t waste another minute.
Moving on to a view from abroad…
Our international editor Kim Iskyan shared an interesting report with us recently, pointing out that the U.S. is in a relatively strong position for a pandemic recovery when compared with other parts of the world…
In the U.S., daily new COVID-19 cases are down 80% from their all-time highs in January. And half of U.S. adults (more than 130 million Americans) have received at least one dose of a COVID-19 vaccine. But as Kim reports…
Much of the rest of the world is grinding through yet another round with the virus… Much of Europe is still under lockdown.
Here in Ireland, where I live, no one’s gotten a haircut in months, and you’re not allowed to travel beyond a 12-mile radius from where you live (lifted just last week from 3 miles). Kids are slowly going back to school, but – what really matters here in Dublin – there’s not even talk of reopening pubs.
And due to epic mismanagement and incompetence, the European Union has vaccinated just half as many people (adjusted for population) as in the U.S. Here I won’t be eligible for a shot until summertime at best… whereas in the U.S., anyone who can fog a mirror who wants a shot, can get it.
To that point, European countries aren’t being as careful using the Johnson & Johnson (JNJ) version of the vaccine – which has resulted in blood clots for at least a handful of folks – as the U.S. has been recently, with its use being paused here in our country.
A European regulatory body said yesterday that the benefits of people taking the JNJ vaccine outweigh the risks
… and required adding a blood-clot warning to the label.
The same could be done in the U.S. by the end of this week… But given the state of COVID-19 cases in Europe, authorities there aren’t waiting around.
Things are also far worse in some of the world’s largest developing economies, Kim says…
India is the new global hotspot for COVID-19, with more than 250,000 new cases a day – up from just 12,000 a day six weeks ago. And things likely won’t slow down anytime soon. More from Kim…
Though the government is administering 3 million vaccines a day, it’s not enough to stem the tide in a country with 1.4 billion people…
And in India – a country with more than four times the population of the U.S., packed into just 40% of the landmass of the 48 continental states – the notion of personal space, and social distancing, is as foreign as birds wearing flippers. If someone isn’t breathing down your neck in India, you’re not in India.
The news is not good in Brazil either, where people are expecting the worst. As Kim told us…
An old friend who’s lived in Brazil on and off for three decades told me last summer that the local notary public – in the small city in the west part of the country, where he has a farmhouse – was working overtime.
People were in a rush to “put their affairs in order”… that is, the notary was preparing twice as many wills than normal. She’d also seen a 50% jump in the number of couples wanting to formalize their relationships by putting a ring on it – just in case the coronavirus reaper came knocking.
Since then, Brazil’s daily new caseload has more than doubled. The recent daily COVID-19 death toll is nearly as high as that of the U.S. back in January – even though the U.S. has nearly 60% more people.
Kim checked back in with his friend who reports the notary is busier than ever…
She had to double her staff. It’s like everyone wants a will, to get married, or both.
The point is, COVID-related risks are declining faster in the U.S. now than most other places in the world…
As Kim says…
Most Americans are relatively untouched by what’s happening in faraway places like India and Brazil. Travel restrictions remain in place – and anyone traveling to the U.S. has to show results of a negative COVID-19 test.
But the massive scale of human suffering in other countries is dulled by distance, pandemic fatigue – and of course by the COVID-19 death toll in the U.S. of nearly 600,000.
But the U.S. is not out of the woods yet…
Variant fears are still a “very real danger,” Kim acknowledged. He cited reports on rising caseloads in Pennsylvania and other states over the weekend.
Still, this is all to say when you’re looking at your investments today, consider that what’s happening in the U.S. now is “ahead of the curve” when it comes to sizing up market risks due to COVID-19 spreads, fears, or lockdowns.
That’s different than the story has been for most of the past year… when it seemed like whatever happened in Europe and other countries would happen in the U.S. in due time – starting with COVID-19 reaching our shores in the first place.
We still see problems with the way monetary and fiscal policy is dreamed up and executed, but if the “what happened there, will happen here” trend is broken for good, the U.S. economy, already the world’s largest (debt be darned!), should emerge relatively stronger and quicker than the others.
It’s still a best house in a bad neighborhood type of situation, though.
One more note before we go today…
The story about the two men in Texas who were killed when a Tesla that neither one of them was driving crashed – which we wrote about on Monday
– has been making its rounds over the past few days.
Of course, Tesla CEO Elon Musk weighed in Monday night via his preferred Twitter platform and said “so far” data logs from the car showed it was not on Autopilot mode.
In response to that message, local authorities said they planned to issue a search warrant to get a look at the data Musk is referring to.
We’ll see how that plays out. That’s not why we bring this story up again today…
Rather, we want to focus on the discussion we started Monday about how to properly put out a lithium-ion battery fire, which power Teslas (and many other electronic devices like laptops and smartphones).
Paid-up subscriber Earl H. weighed in yesterday, suggesting that an argon-based extinguisher would work and that using water was a bad idea. It was the first time we had heard about the first idea, but we knew the second point was true.
To that point, Stansberry Venture Technology editor Dave Lashmet read the feedback. And he sent a response in a private note to us overnight…
Here’s how to properly put out a Tesla fire…
Dave’s breadth of knowledge never ceases to amaze us, and we’re happy to close out today’s Digest by passing his information onto you. As he explained…
No, argon fire extinguishers will not work on burning Teslas. Argon fire suppression systems are for enclosed places: buildings, labs, cave complexes!
It’s because argon is a gas – and although it is heavier than air, it will dissipate – not least from the heat of the fire that it’s trying to extinguish. Nitrogen will also readily mix with air (air is already 80% nitrogen), so it won’t easily exclude oxygen (the other 20% of air).
Instead, you can use foam (like for airports), or an ABC or BC dry chemical fire extinguisher (it’s a class B fire). You can also probably use a CO2 fire extinguisher to put out the fire, and then cover it in powdered graphite, baking soda, or copper powder.
As for water, well, there’s oxygen in there, too, and the burning lithium-ion batteries will find it.
A hazmat team for the fire department should be able to handle this kind of fire. But if it’s an all-volunteer force with only water tankers – yeah, that’s a problem.
Our salient idea about this story still holds…
All we’re saying is that there’s more to rolling out Teslas or other electric vehicles (EVs) or autonomous vehicles all over the world than simply building and selling them.
Case in point, firefighters tackling this crash in suburban Houston contacted Tesla directly for help as the car burned… But they couldn’t get through to the company for guidance.
Maybe they should’ve went to Twitter to reach Musk instead…
The safety, education, and likely regulatory angles of EV development should not be overlooked. And based on today’s valuations of Tesla and some other EV companies, these factors might be undervalued today.
At the same time, though, a few of our editors believe EVs are the future of automobiles. There are bigger tailwinds (like proposed government spending and general green-energy initiatives) than headwinds for EVs today.
For another part of this story, be sure to read tomorrow’s Digest essay from Stansberry’s Big Trade editor Bill McGilton. He’ll talk about the problems facing the gas-powered auto industry right now… at the same time burning Teslas are making headlines.
The Debate of the Century
The day has finally arrived…
This afternoon, the great debate – bitcoin versus gold – between crypto bull Michael Saylor and gold bug Frank Giustra, moderated by our editor-at-large Daniela Cambone, went live.
They compared the pros and cons of both assets, talked about risk, historic performance, ownership, and the market forces that influence bitcoin and gold. Somebody get this video on the blockchain now!
To gain instant access right now, enter your e-mail address at DanielaCambone.com
. You’ll then receive a link to the debate in your e-mail inbox…
And while you’re at it, be sure to subscribe to our Stansberry Research YouTube page
for ongoing video content from Daniela and her long line of knowledgeable guests… More than 300,000 folks have done so already.
AutoZone (AZO), Crown Castle (CCI), Hershey (HSY), Invitation Homes (INVH), IQVIA (IQV), Rayonier (RYN), S&P Global (SPGI), Seagate Technology (STX), Consumer Staples Select Sector SPDR Fund (XLP), Health Care Select Sector SPDR Fund (XLV), Alleghany (Y), and Zimmer Biomet (ZBH).
In today’s mailbag, feedback on yesterday’s Digest
about Retirement Millionaire
editor Dr. David “Doc” Eifrig’s idea for gifting stocks to the younger generations. Do you have a comment or question? As always, send your notes to email@example.com
“Almost three years ago, a friend of mine, a longtime Alliance member, offered to show me the ropes of investing. She had actually tried a couple years prior, but I was skeptical of Wall St. and not interested. The second time I accepted, and the first thing she did was point me toward Stansberry. Since then, I’ve been a voracious reader every day, 7 days a week, helped by the great book recommendations from Dan Ferris.
“When my job ceased March 2020, I had a nice portfolio going and felt prepared to face the uncertainty ahead. I’m certainly not a kid, but with all the different types of investing approaches I’ve learned about, I know giving someone this gift at any age is priceless. I live and breathe this gift every day. Thanks to her and thanks to Stansberry.” – Paid-up subscriber Gary S.
Corey McLaughlin comment: Gary, this made our day. And you are totally right… You don’t have to be, and in many cases can’t be, a kid to get started. Thanks for the note.
“I was so happy to see [yesterday’s Digest
] because I did this and it WORKS!
“When each of my grandkids were born, I opened them custodial savings accounts (as soon as they got SS#’s) and put $50 a month into each of their savings accounts.
“When the accounts got high enough and they got old enough, I explained to them how buying stocks works and the risks involved and gave them the option of leaving their money in savings or investing it in stocks. They both chose to invest in stocks and they sat with me while we opened their online E*TRADE custodial brokerage accounts. Then I showed them how to research companies and of course we referenced Stansberry recommendations.
“Like most kids, they were very into video games, so we decided to invest their money into shares of Activision Blizzard. I even showed them the back of their Call of Duty video game cases where it shows the Activision Blizzard name, which was actually very exciting to them!
“Over the next 5 years, they watched their money more than triple thanks to the rising bull market and reinvesting dividends. Since it was a company they were interested in, they really loved learning about investing – and loved bragging to their friends that they owned a piece of ‘the Call of Duty’ company!
“Today they have a nice little nest egg to get them started in life; and I’m proud knowing that I taught them about investing their money wisely.
“Thanks for the great article and for all your wonderful investment advice!” – Paid-up subscriber Valerie B.
McLaughlin comment: Valerie, thank you. Good for you and your grandkids.
“Hi Doc, anyone that is starting out in the investment world needs to have some basic information on investing. There couldn’t be a better place to start than Retirement Millionaire
, it is by far the best buy for your dollar. It gives good sound advice on a lot of subjects pertaining to investing and how to maintain good health. If you invest like he says, you will make $, but don’t think you will make a zillion $ overnight. Be patient and the profits will show up. Don’t buy into the newsletters that say you will double your $ in a year, I tried it and it is pure B.S.” – Paid-up subscriber R.C.
McLaughlin comment: This is as good of a description as we could write about Doc’s Retirement Millionaire. Yes, as we alluded to yesterday, Doc – a rare breed of former Wall Street trader and medical-school graduate – gives financial and health advice each and every month.
As we offered yesterday, if you don’t already subscribe to his flagship newsletter, in the spirit of gift-giving, you can give Retirement Millionaire
a try for the next six months for just $29. It’s money well spent if you ask us. Get started right here
All the best,
April 21, 2021
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Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
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