Investing in stocks is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Legendary investor Warren Buffett defines investing as “the process of laying out money now in the expectation of receiving more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

The key is that you don’t need to be an expert to invest like one. What you need is a good source that explains what is happening in the markets and then makes recommendations, telling you WHY you should invest in that stock or sector.

Since 2002 the Trend Letter has delivered average returns of over 40% per closed trade. We help people just like you understand what is happening in the markets and what sectors, and stocks make the most sense to invest in.

What Are the Risks of Investing?

Investing is a commitment of resources now toward a future financial goal. There are many levels of risk, with certain asset classes and investment products inherently much riskier than others. However, essentially all investing comes with at least some degree of risk: it is always possible that the value of your investment will not increase over time. For this reason, a key consideration for investors is how to manage their risk to achieve their financial goals, whether they are short- or long-term.

Key rule: Have an Exit Strategy

The first rule in being a successful investor is to not lose money. That might sound obvious, but the truth is most investors have no exit strategy for when they are wrong.  Basic human emotion is perhaps the greatest enemy of successful investing. But whether you’re a long-term investor or a day trader, a disciplined approach to trading is key to profits. You must have a trading plan with every trade. You must know exactly at what level you are a seller of your stock—on the upside and the down. Before we buy any stock or Exchange Traded Fund (ETF) we always set a SELL Stop in case the market moves against us.  When the stock starts rising, we raise our SELL Stop to ensure we lock in gains when we get a pull back.

The bottom line

Being a successful invest requires having the tools necessary that give you the best information to understand current and future market trends. At Trend News we offer three services for investors:

  1. Trend Letter is a weekly service that covers stocks, bonds, currencies, commodities, and precious metals. Trend letter has been publishing since 2002 and has an incredibly successful record over that 20+ year span.
  2. Trend Technical Trader (TTT) is an online service that was originally designed as a hedging service, allowing investors to protect their investment during down markets.  We have expanded TTT service to include trading long positions in precious metals, commodities, and other sectors as well.
  3. Trend Disruptors is our service for investors interested in investing in technical sectors. Disruptive technology propels us into the future at a rapid and increasing pace. Virtually no industry goes untouched, as the boundaries between the physical and virtual worlds are erased, transformed, or re-imagined. New technology can re-shape existing business around the world, and create entirely new business models never before thought of.

Whatever you  experience, we have a service that can help you become a very successful investor. It’s your money – take control.

Election Month Market Moves: Setting the Stage for 2025

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November 2024 brought a whirlwind of market activity following the Trump election, with standout performances setting the tone for what could be the next big trading themes. Here’s a condensed look back—and some thoughts moving forward.

Market Highlights Post-Election

  • Explosive Gains: Ethereum (+49%), Bitcoin (+42%), natural gas (+26%), cloud storage (SKYY) (+17%),  broker-dealers (IAI) (+16%), and software (IGV) (+15%), stole the show.

  • Broad Rally: Oil and gas (XOP), financials (XLF), the Russell 2000 (+11%), and internet stocks (FDN) (+10%) showed strong follow-through.

  • Trading Targets: These sectors could lead the next wave of performance—we want to keep an eye on the frontrunners.

Trump-Era Market Signals

  • VIX Decline: A drop from $23 to $13.70 eased market fears, clearing the way for equity gains.

  •  Sector Laggards: Cannabis stocks (MSOS, -37%) and solar energy (TAN, -9%) faced heavy losses amid Trump’s pro-energy, anti-renewables stance.

Key Risks and Observations

  • Semiconductors are a source of concern: Semi ETF  SMH up 50% YTD but was down ~9% in November.

The Playbook

  • Trump Trade Momentum: Bitcoin (IBIT), software (IGV), S&P 500 (SPY), financials (XLF), broker-dealers (IAI), cloud storage (SKYY), and consumer discretionary stocks are leaders who we need to keep watching.
  • Tactical Approach: Wait for pullbacks, manage risk, and position for continued strength into 2025.

The market has identified its current leaders. As the Santa Claus rally approaches, expect continued momentum, but post-inauguration, market euphoria may cool off. That pull back could present a good buying opportunity.

Stay tuned!

Trump’s Victory Fuels Market Frenzy: Today’s Charts

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The S&P 500 soars: The stock market skyrocketed with Trump’s victory and the Republicans securing the Senate and poised to claim the House.

Bitcoin soars to new high: Bitcoin surged past $75,000, driven by Trump’s pledge to establish the US as a leading crypto hub. This rally reflects heightened investor optimism around a potential crypto-friendly regulatory environment under the new administration.

US Dollar blasts higher: The dollar marked its strongest day since 2022 on a strong stock market and rising yields.

Bank stocks rally: Bank stocks soared as investors anticipated deregulation and economic growth under the new administration. Major institutions saw substantial gains, with JPMorgan Chase leading the way, up 13% today.

Gold falls: With a huge rally in the US dollar, gold got clobbered, down 73.00 for the day.

Bond market turmoil: While Trump’s policies are welcomed by the stock market, the bond market is reacting less favorably. Expectations of lower tax revenues and higher government spending point to rising deficits and ballooning debt. As inflation expectations climb, the value of fixed-income investments erodes, pushing investors to demand higher yields, which drives bond prices down. This dynamic reflects concerns over inflation and fiscal imbalances under the new administration.

Green stocks get hammered: Companies in the green energy sector saw sharp declines, with solar stocks such as Sunnova Energy plummeting—Sunnova dropped a staggering 51% today. This sell-off underscores investor concerns about reduced environmental policy support under Trump’s administration, casting uncertainty over the future of renewable energy initiatives.

Market insights: This political landscape gives Trump significant leeway to implement his pro-business agenda—lower taxes and reduced regulations—which investors see as fuel for market growth and economic expansion. The rally reflects Wall Street’s optimism about a policy environment favoring corporate earnings and business-friendly reforms.

 

 

Week ending November 1, 2024: Key Market Highlights

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The S&P 500 drop: Key points on the chart are the breaking of the ‘rising wedge’ pattern (red & green dashed lines), and the testing of the 50-DMA (blue line). The 100-DMA (red wavy line) at 5592  would be the next key technical support level.

Volatility Risk: The past 12 months have delivered some of the strongest risk-adjusted returns in market history. However, volatility is now on the rise, driven by the increasing likelihood of a fiercely contested presidential election. In today’s polarized political landscape, this is far from a remote possibility.

Election Showdown: One way to gauge market sentiment on the US election outcome is by tracking the action on Trump’s media stock. From May to late September, investors were unloading the stock. Then, momentum shifted dramatically as buying surged—only to taper off about a week ago. This pattern suggests a razor-thin race, with Harris picking up momentum as election day approaches.

Investor optimism hits record high: The Conference Board surveys respondents on whether they believe stocks will rise or fall, and the current bullish sentiment has reached its highest level since the survey’s inception in 1986. What could go wrong?

Oil prices spike with escalating tensions: Oil prices climbed at the week’s end, fueled by rising tensions in the Middle East. Reports suggesting that Iran might be preparing a major attack on Israel have sparked concerns over potential disruptions to the region’s oil supply.

Market insights: The biggest relief about the US election may simply be that it will eventually conclude. Yet, the process could stretch for weeks, with disputes over vote counts and tactics adding to potential chaos. While we don’t anticipate a lasting impact on the market, the uncertainty is likely to drive short-term volatility and speculative losses. The best ‘election trade’ might be patience: staying focused on long-term fundamentals rather than getting swept up in the noise. In time, the distraction will fade, and attention will shift back to what truly matters.

Special Offer Extended: Due to popular demand, we’ve extended our offer to upgrade to a full Trend Letter subscription! Get 33% off now through this weekend—offer ends Sunday, November 3/24 at midnight. What are you waiting for?!

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This Week’s Key Market Highlights:

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October 25, 2024:

The S&P 500 dip:  The first weekly decline after six gains suggests a potential bounce next week, though election volatility could bring market jitters, especially if results are delayed.

US Election Countdown: With just 10 days until the election, markets leaning toward a Trump victory due to his pro-deregulation stance, seen as favorable for business.

Rising Bond Yields: Concerns about persistent inflation are pushing bond yields higher, limiting room for Fed rate cuts. The Bank of Canada cut rates by 50 bps to 3.75%, and the ECB by 25 bps to 3.4%, contrasting with the Fed’s 5%.

Rising Mortgage Rates: Contrary to expectations, mortgage rates are rising, tracking higher bond yields despite the Fed’s September rate cut.

US Dollar Surge: Up 4% since late September, the dollar’s strength reflects robust US economic data, solidifying it as the “least ugly” currency in uncertain times.

Canadian Dollar Weakness: As the Bank of Canada cuts more aggressively, the loonie falters amid Canada’s weaker economic outlook.

Homebuilder Setbacks: Rising mortgage rates weigh on homebuilder stocks.

Gold Near Highs: Gold is nearing new highs with its RSI around 70 (bottom of chart), signaling potential overbought conditions and a possible pullback.

Market Insights: Bullish trends continue, but election uncertainty looms. A clear election outcome may trigger a ‘sell the fact’ reaction.

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Why the Bond Market Fears Inflation Despite Fed Rate Cut?

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Why Retail Investors Should Pay Attention to the Bond Market

Many retail investors overlook the bond market, dismissing it as too complex or less exciting than stocks. However, bonds hold the key to understanding broader economic trends, especially interest rate movements. Ignoring them means missing out on critical insights that could enhance your investment decisions

The Unexpected Rise in Long-Term Rates

On September 18, 2024, the US Federal Reserve announced a significant 50-basis-point rate cut, the first since July 2023. Typically, rate cuts are designed to lower borrowing costs, leading to a drop in bond yields. However, this time, the opposite happened—interest rates on 10-year bonds went up, not down. So, why are these longer-term rates rising?

The impact was also felt in the real estate sector. The 30-year US mortgage rate jumped back to 6.69%, a surprise to many who expected lower mortgage rates following the Fed’s rate cut. This spike has left homeowners and real estate professionals rethinking their expectations.

Why Inflation Expectations Are Rising

To understand why bond yields and mortgage rates are rising, we need to look at the underlying factors driving these movements. One major reason is long-term inflation expectations. While the Fed may believe inflation is under control, the bond market seems to think otherwise. One of the key reasons why is related to soaring government deficits:

  1. Reckless Government Spending: The US government’s increasing debt levels mean more bonds are issued, leading to a flood of new supply.
  2. Replacing Maturing Bonds: New bonds must be issued to replace those that are maturing, adding more supply.
  3. Funding New Debt: Continued high levels of government spending require new bonds to finance the debt, driving yields higher as investors demand more to take on increased risk.

Since the debt ceiling was suspended on June 2, 2023, the US has added a whopping $4.3 trillion to its debt total, with national debt fast approaching $36 trillion. To put it into perspective, the $600 billion increase over the last two months is nearly three times the annual budget of NASA.

Navigating the Current Investment Landscape

Clearly, the bond market is sending a warning signal: inflation is not as controlled as we might like to believe, and expectations are that it will continue to rise. As inflation erodes the purchasing power of the dollar, many investors are turning to alternative assets like gold and Bitcoin.  Gold closed at a new all-time high today.

These assets offer a limited supply, making them less susceptible to devaluation. Unlike paper dollars, governments cannot print new gold or bitcoins out of thin air, which is why they remain popular as inflation hedges.

 Why You Should Stay Informed

Our team at the Trend Letter has been monitoring these developments closely. We’ve been publishing insights for over 22 years, helping our subscribers stay ahead of market shifts with timely alerts and data-driven analysis. Our models have consistently alerted us to key changes in the market, and our current portfolio is up 39% this year.

We provide our subscribers with weekly reports every Sunday evening, covering all major sectors, key events and trends to watch, including:

  • The effects on the markets of the upcoming US election
  • Central bank actions
  • Inflation trends
  • Potential recession risks
  • Seasonal market movements

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Stay tuned!

This Week’s Trends & Market Highlights

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October 18, 2024 Key Market Highlights This Week:

Gold reaches a new all-time high despite rising interest rates and a stronger U.S. dollar, driven by surging national debt.

The S&P 500 breaks through to a new record high, signaling strong market momentum.

Uranium stocks ratchet higher, fueled by increasing demand for energy, especially from AI data centers.

Semiconductors roaring  back, with Nvidia testing new all-time highs.

Market Insights: We’re witnessing a broad-based bull market across multiple sectors, even as bond yields rise and economic indicators fluctuate. Look out for a comprehensive update in this Sunday’s issue of the Trend Letter.

Special Offer: As a free subscriber, you can now upgrade to the full Trend Letter subscription at a 33% discount this weekend. Don’t miss out—click below to take advantage of this special offer.

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This Week in Money Interview

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Martin did his monthly interview with Jim Goddard on the This Week in Money show. Topics discussed were:

  • Stock market trends
  • Gold coming into seasonal strength
  • Have geopolitical events been priced into oil?
  • Why has the $US been rising, especially given the Fed just made a deep rate cut?
  • The Fed says its not worried about inflation anymore, should they be?
  • There is a lot of mainstream media talk about a Soft vs Hard landing. What does it mean and how should investors prepare for either scenario?
  • The Fed cut rate 50-bps, and now the long bond yields are rising, which seems counterintuitive. Why is that happening?
  • The Shanghai stock exchange had wild swings in the past week, what is happening there?
The other guests on the show—Ross Clark, Victor Adair, and Josef Schachter also offer sharp perspectives on the current market landscape. Tune in!

Click here to listen.

Chart Alert: Double Top Resistance Signals Potential for Sharp Decline

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This is an important chart!

The S&P chart reveals two critical outside reversal weeks down from the 5,700 level—the first ending July 19th and the second just last week, on September 6th. These consecutive reversals in such a short time frame have created a powerful double top resistance.

After the July 19th reversal, we saw a retracement rally to 5,630 before plunging 500 points (~10%) to 5,100 over the next three weeks. We want to caution investors that a similar pattern is very much in play now. Following last week’s reversal, there’s potential for a bounce to around 5,550, but don’t be surprised if that rally falters.

If we reach that 5,500 level, be prepared with your hedging strategies, as the S&P could easily test its 200-day moving average near 5,150. Head on a swivel!

Stay tuned!

If the Fed cuts rates will that be the time to buy stocks?

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In last week’s interview on This Week in Money with Jim Goddard, we explored the likelihood of the Fed beginning to cut rates at their September 18/24 meeting and debated how aggressively they would cut. The current rate is 5.50% and according to Fed fund futures,  by the end of 2024, the rate will be 4.16% or 24% lower than it is today. By the end of 2025, that data expects a rate of 2.82%, slightly more than half the current rate.

The stock market, which just came off of all-time highs two weeks ago,  experienced a decline every trading day last week. This stock market is driven by momentum, rather than value.

During my discussion with Jim, I referenced a short video (9:44) I created in December, demonstrating that typically, markets experience a brief uptick when the Fed pauses after raising rates, which we have seen. However, once the Fed starts aggressively cutting rates, stocks sell off.

And this pattern is logical, as rate cuts are typically triggered by economic difficulties and impending recessions, prompting investors to sell stocks due to their vulnerability in such conditions. In the short video, you will see that markets decline, often dramatically, during aggressive rate-cutting periods. Stocks tend to recover and experience strong rallies, only after the Fed ceases cutting rates.

Consider this:  if the Fed embarks on an aggressive rate cut cycle starting September 18, be cautious of mass media pushing for stock purchases. The video highlights a potential risky scenario, akin to a trap. So, keep your head on a swivel. View video

Market Notes

Navigating market crossroads

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As an investment newsletter we strive to keep investors on top of what is driving the markets.

As we have been highlighting for Trend Letter subscribers the last few weeks, we are currently well-positioned for a potential pullback in the S&P. The developments in yesterday and today’s price action has increased the likelihood of such an event. As we have highlighted there are a number of indicators flashing warnings that a correction is due::

Seasonality:

The S&P 500 has  almost perfectly followed the seasonal trend in 2023 and if this continues, then a pullback around now till the end of January is likely.

Fear & Greed:

The Fear & Greed Index serves as a tool for assessing stock market dynamics and evaluating the fairness of stock prices. The underlying principle is rooted in the idea that an abundance of fear tends to push down stock prices, while an excess of greed tends to exert the opposite influence, driving prices higher.

As sentiment reaches extreme levels, it often undergoes a swing from one extreme to the opposite. Over the past few weeks, sentiment has been consistently characterized by Greed and has now escalated to Extreme Greed, indicating a potential shift in the opposite direction.

Overexposure:

Another  indicator that we published last week for subscribers is the  NAAIM Exposure Index which represents the average exposure of  fund managers. In October, fund managers were less than 25% exposed to the S&P 500. Today they are over 100% exposed, employing leveraged long strategies. The last time were saw this extreme bullish sentiment was back in July (top arrow) where we saw the start of a ~10% correction in the S&P 500 (lower red arrow).

Volatility:

Another signal of caution comes from the VIX Volatility Index. The VIX serves as a metric indicating investors’ expectations regarding near-future stock market fluctuations. Commonly known as the ‘fear gauge,’ the VIX tends to climb in response to heightened uncertainty or fear in the market. Recognized as a contrarian indicator, it often suggests a potential reversal when reaching extreme levels. Presently, the VIX has lingered at historically low levels, signaling an exceptionally bullish sentiment in the markets. However, when sentiment becomes extremely bullish, it implies a dearth of buyers, often indicative of an impending correction.

While we expect a correction in the early to mid-January, we will be looking  to play such a downward move as a buying opportunity.  The year 2024 being an election year in the United States adds an interesting dynamic. Historical patterns suggest that stock market performance tends to improve during election years. This improvement is often linked to the incumbent’s capacity to boost investor enthusiasm through strategic initiatives, such as substantial spending, particularly targeted at significant voter segments like millennials today.

What to watch for:

The US dollar rallied strongly from July until October followed by a decline since October, coinciding with a decrease in bond yields. This decline has notably benefited equities. However, the trend appears to have become overextended, prompting a test of the downtrend line for the US dollar. If a breakthrough occurs, it could lead to, at least, a temporary rally in the US dollar, negatively impacting stocks (especially in the tech sector), bonds, precious metals, base metals, and other commodities.

To validate these expectations, we will be monitoring the following indicators:

  • A VIX Volatility rally surpassing 20
  • Fear & Greed Index entering the Fear range
  • NAAIM Index dropping below 60
  • S&P 500 testing 50-DMA at 4621, followed by the 100-DMA at 4454, and potentially the 200-DMA at 4361

If we hit these targets, then it could set up a great buying opportunity. Trend letter subscribers receive all BUY & SELL signals.

The forecasts could potentially be bleaker. Escalation of conflicts in the Middle East, tensions between China and Taiwan, and other unforeseen events are factors that could exacerbate the situation. It’s advisable to keep a close eye on your SELL Stops.

Stay tuned!