The market looks rosy and bright for a lot of investors at the moment… But can you blame them? If the economy is growing strong, then the market will rebound in response. If the economy is weak, then the government will give people more free money.
It’s a win-win.
However, things in Wall Street aren’t moving like a finely tuned, well-oiled machine like they should… And it has WealthPress Senior Strategist Roger Scott and I scratching our heads, wondering what’s wrong with the stock market right now.
We’re seeing a lot of overstretched prices and insane moves up and down — have you seen what’s been going on with crypto?
And none of this feels steady or stable enough to trade with confidence. The market is vulnerable and pricing in every piece of good news it can find in the world.
Which won’t be good in the long run.
But that’s not even the most alarming thing we’re seeing that’s wrong with the stock market…
Did you see how the yield curve reacted after Federal Reserve Chair Jerome Powell’s announcement on interest rates on June 16?
When the yield curve flattens it means that long-term interest rates (like the 30-year bond) are coming down a lot more than the short-term interest rates. And in this particular case, the short-term rates actually went up a bit.
Here’s the unusual thing: Moves like this usually portend a bear market.
Yet… how does that happen if the economy is supposedly booming? The yield curve is giving us an indication that the economy is more confused than investors realize.
But that’s not even the most concerning part of what’s wrong with the stock market right now.
About two months ago, 90% of the stocks in the S&P 500 were trading above their 50-day moving averages. A few weeks later, there was a dip to 30%. Now, barely 40% of stocks are trading above their 50-day MA.
So how is the S&P 500 at new all-time highs with a historic number of stocks trading above their 200-day MA?
The answer is simple: Only a couple of large-cap stocks are moving the entire market.
This creates even more vulnerability than ever before because investors are hanging onto trades by a shoestring.
What’s even worse is that the Fed is almost actively making things worse for the average investor and young adults looking to buy their first home. The Fed’s stubbornness on buying mortgage bonds — when we have the tightest housing marking in American history — is mind-boggling.
They’re transforming the American dream of owning a home into an American nightmare. No one can really afford a house in this type of environment — not even to rent.
Heck, no one can really afford gas right now… and it’s about to get worse.
Mark uncle J-Z’s words: By the time July 4 rolls around, it’s going to feel like the summer of 1979 all over again, with gas prices through the roof.
Before it was the pandemic that stopped people from visiting their grandparents. Now it’s going to be the price of gas that keeps people homebound.
Check out our short video below to learn more about what’s wrong with the stock market right now. I also gave away a free Money Link trade that I know will do wonders in this type of economy.
Also be sure to share your thoughts in the comments section below.
And as always, send any trading questions to email@example.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
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