Stock Market Warning – And Silver Opportunity
This article was written for Miles Franklin by Gary Christenson.
THE BIG PICTURE:
The Dow and S&P 500 Index topped January 26. The NASDAQ 100 topped on March 13-14. What comes next? Is this the best question?
- The top has occurred. Lower highs, lower lows, and weak rallies. Think Bitcoin, stocks in 2000 and 2008.
OR …
- The weakness since the all-time highs is a pause in a Fed supported and High-Frequency-Trading created rally. Investors expect new highs in coming months.
Examine the monthly charts for the DOW and the NASDAQ. Note the near vertical rises, extreme over-bought conditions, and high prices. Fundamental valuations based on a dozen metrics (not shown) are in the “nose-bleed” zone. They scream “Watch Out Below!”
Or we can trust the Fed to shove over-valued stocks to new highs while they raise interest rates. I’m skeptical.
Weekly charts show a huge rise, over-bought conditions and worrying weakness.
Prices broke below monthly and weekly trend line supports. They warn markets have peaked. The RSI (Relative Strength Index) hit a multi-decade high on the NASDAQ 100 and a 116 year high for the DOW. More warning signs …
WHAT ABOUT DAILY PRICES?
Prices broke support. They might climb back to all-time highs. Global central banks created about $20 trillion in “funny money” in the last decade that levitated markets and boosted wealth and income of the financial and political elite. More “funny money” and additional levitation are possible. Example: The NASDAQ peaked in January and then fell, but rallied back in March to a new high, UNCONFIRMED by the DOW and S&P 500 Index.
THE NASDAQ 100 TO S&P 500 INDEX RATIO:
When the ratio rises the NASDAQ is stronger than the S&P 500 Index. The ratio peaked in 2000 before the NASDAQ dropped 84%. The ratio is high today. This is another warning sign of excessive froth and high valuations in the NASDAQ, particularly the “FAANG” stocks.
CONCLUSIONS:
- The DOW, S&P 500 and NASDAQ 100 are priced high and have flashed “warning signs.” This is not a guarantee of a crash. Stock markets looked dangerous in early 2015 but rallied higher, thanks to central bank levitation, optimistic beliefs in the economy, and financial media cheer leading the markets higher.
- ARE WE ASKING THE WRONG QUESTIONS? Instead of, “Are the stock markets going higher or correcting?” Let’s ask, “Should we consider another market, instead of over-valued high-risk stocks that might crash?”
- WHAT ABOUT SILVER? Prices peaked in April 2011, were crushed thereafter, and moved little since July 2013 (low of $18.73), even though central banks added $ trillions in “printed” liquidity and the official U.S. national debt has increased $4.3 trillion since July 1, 2013 when silver sold for under $19.
Silver prices are low, monetary stimulus has boosted currency in circulation, and silver prices have not reset higher after monetary stimulation, huge federal government debts and expenditures, trade wars and “hot” wars.
Russia and China accumulated and photographed a vast hoard of silver and gold. The Fort Knox gold has not been audited since Eisenhower was President. (Why?) The western nations sold gold to Asians who understand its superior value compared to debt paper. These and many other facts point toward much higher silver prices in coming years.
CONSIDER THIS GRAPH SHOWING RELATIVE STRENGTH OF SILVER VERSUS THE NASDAQ.
SILVER PRICES ARE TOO LOW! Compared to the NASDAQ silver is low, and the NASDAQ is priced too high. Expect a reversal – perhaps soon.
It is sensible to buy silver low and sell NASDAQ stocks high in early 2018.
Examine this long-term graph of silver prices.
Silver prices fell to long-term support and should spike higher.
Examine this graph of weekly silver.
Silver prices bottomed in December 2015 and climbed since then. The charts suggest rotation out of over-valued NASDAQ stocks and into silver, a far better “risk-reward” investment in 2018.
Consider risk versus reward. Stock markets are too high while silver (and gold) are priced too low in early 2018.
Call Miles Franklin at 1-800-822-8080 to buy real silver bullion and coins with paper profits in debt-based fiat currencies. Exchange over-valued stocks that might rise a few percent, or fall over 50%, for physical silver.
Gary Christenson
