Since the appearance of the bearish island reversal we noted two weeks ago, stocks have struggled and so far failed to regain the highs reached earlier in June.
And another bearish island reversal happened on Tuesday:
The resistance displayed by these reversals and the resulting choppiness of trading are exactly the sort of indicators we would expect to see precede a market downturn.
At a minimum, it certainly appears that the meteoric surge in stock prices since the March bottom ended in early June. Stocks have struggled since and just closed down another 2% today alone.
So with the market suddenly struggling here, what’s more likely: a roll-over or a resumption of the rally?
We invited Charles Hugh Smith, proprietor of OfTwoMinds.com as this week’s expert guest onto the program, and he reveals three key threats to the market that he thinks are dangerously underappreciated at the moment.
One, sentiment remains euphoric, yet covid-19 cases are resurging across the US. The market is currently treating the coronavirus likes it’s ancient history. If cases and deaths continue to build momentum from here and force a roll-back of lifted restrictions, stocks will be forced to price in the additional damage to the economy.
Two, the Federal Reserve is coming under increasing public criticism for how its policies and intervention are painfully exacerbating social inequity. The Fed may not be able to continue denying and deflecting, and may re-direct more of its future efforts to Main Street vs Wall Street, removing the key (only?) pillar supporting today’s asinine stock prices.
Three, entities like the Fed who make up the Deep State, which has warred with President Trump over the past four years, may have incentive to let the market crash this summer. Trump has very visibly tied his administration’s performance to that of the stock market; if the Deep State desires to deny him a second term, this is the most lethal weapon they can fire at him.
In this week’s video, we debate Charles’ “triple-threat” outlook with the the lead partners at New Harbor Financial, Peak Prosperity’s endorsed financial advisor, who then also share their latest insights into the road ahead for investors.
Suffice it to say, we are now seeing multiplying signs of market vulnerability that only the imprudent would ignore:
* * *
Anyone interested in scheduling a free consultation and portfolio review with Mike and John can do so by clicking here. And if you’re one of the many readers brand new to Peak Prosperity over the past few months, we strongly urge you get your financial situation in order in parallel with your ongoing physical coronavirus preparations. We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great. But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.