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The Market Just Gave Us Three “Tells” - But Few Are Paying Attention

October 31, 2016

Are you worried about a market drop?

I’m not, we’ve been preparing for what’s coming for weeks.

Why do I think the markets will be dropping?

1)    Globally bond yields are spiking. With bond yields rising, earnings yields will follow. The only way for earnings yields to rise is for stock prices to FALL.

Long bonds lead stocks to the upside this year. They’re now leading DOWN.

2)    The market is being held up by just 5-6 stocks.

The number of individual companies above their 50-day moving averages has been in a virtual free-fall since February. Literally a handful of companies remain strong. Everything else is breaking down.

3) Earnings have already collapsed to 2012 levels.

At the end of the day, investors buy stocks for earnings. But earnings have already collapsed to levels not seen since 2012.

Stocks would need to CRASH over 25% to below 1500 just to catch up.

 

Bond yields spiking? Stock internals in a free-fall? Earnings in a severe collapse?

This has the makings of a financial crisis. The whole mess is starting to feel a LOT like 2008 again.

The time to prepare is now.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.


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