By Justin Spittler, editor, Casey Daily Dispatch
U.S. stocks keep racing higher.
Yesterday, the S&P 500 hit a new all-time high. It’s now up 12%.
Many investors are baffled by this, and for good reason.
You see, U.S. stocks have been rising since March 2009. That makes the current bull market the second-longest in U.S. history.
Of course, this party will eventually come to an end. And when it does, many investors will take heavy losses. Some will lose everything.
This is why I’ve been urging investors to own gold, hold extra cash, and get out of risky stocks.
I’m trying to help you protect your hard-earned money.
Of course, I don’t know when the top will come. No one does.
But if there’s anyone who might have a good guess, it’s Steve Sjuggerud.
• If you don’t know Steve, you should…
He’s one of the top analysts in our industry.
Over his career, he’s generated average annual returns of 16%. That puts him in league with some of the world’s best hedge funds.
Yesterday, I had the privilege of hearing Steve speak at the Stansberry Conference in Las Vegas, Nevada. His presentation was so powerful that I decided to write an entire issue about it.
In a minute, I’ll tell you why Steve thinks U.S. stocks will keep rallying. But you have to understand something about him first.
• Steve’s a contrarian…
Now, I know a lot of people claim this. But Steve’s the real deal.
In fact, he was one of the first analysts to turn bullish on U.S. stocks after the global financial crisis.
Keep in mind, this was NOT a popular opinion in 2009. Back then, many large U.S. stocks were down 50% or more. The U.S. economy was also in shambles.
• Most investors wanted nothing to do with stocks…
But Steve saw an opportunity where others only saw danger.
That year, he told his investors to back up the truck on U.S. stocks. This bold bet paid off.
Just look at this chart of the S&P 500.
You can see it’s surged more than 271% since March 2009.
• That’s an enormous return…
But don’t worry if you missed out on this monster rally.
Steve says there’s still time to make a fortune off U.S. stocks. He told attendees at the Stansberry Conference yesterday:
The stock market peak won’t arrive until 2019/2020.
This, once again, is a very bold call.
• You see, U.S. stocks are incredibly expensive after their huge run…
The S&P 500, for one, trades at a cyclically adjusted price-to-earnings (CAPE) ratio of 31. That’s 83% higher than its historical average.
U.S. stocks have only been this expensive one other time, and that was during the dot-com bubble.
When that party ended, the average U.S. tech stock plunged 78%. Many dot-com darlings went to zero.
• This is why many investors are avoiding U.S. stocks…
But Steve’s not losing sleep over this.
You see, unlike most analysts, Steve digs deep for clues about where the market’s headed next.
And right now, none of his trusted indicators are signaling danger. Instead, they’re giving the “All Clear” signal.
Take market breadth, which measures how many stocks are participating in a rally.
When breadth is good, more stocks are rising than falling. When it’s bad, more stocks are falling. That’s a sign of an unhealthy market.
• Bad breadth can even signal that a market’s about to crash…
Just look at the chart below.
The black line you see is the S&P 500. The blue line is the advance-decline (A/D) line, which is a popular way to measure breadth.
When the A/D line is climbing, it means more stocks are rising than falling. When it’s declining, the opposite is happening. More stocks are falling than rising.
You can see the S&P 500 and A/D line tracked each other for most of the late 1990s. Then, in 1999, they went their separate ways. The A/D line plunged. And yet, the S&P 500 kept rising.
This meant fewer and fewer stocks were holding up the market.
The next year, the market topped out. The S&P 500 went on to plunge almost 50% over the next two years.
• This is why Steve pays such close attention to market breadth…
It can warn of danger before it shows up in the headline indices.
But this key indicator isn’t signaling danger right now. Instead, Steve says it’s giving the “All Clear” signal.
To see why, let’s look at an updated version of the chart I just showed you. You can see that the S&P 500 and A/D line are both still rising.
Steve says this is a sign of a healthy market. And it’s a big reason why he’s still bullish on U.S. stocks.
So, keep this in mind if you’ve been thinking about cashing out. If Steve’s right (and he often is), a lot more money will be made in U.S. stocks over the next couple years.
Las Vegas, Nevada
September 28, 2017