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Stocks: Much Higher Highs to ComeBy
Thursday, September 10, 2015
This bull market in stocks is not even close to over yet.
Stock prices should have much higher highs ahead, based on the weight of the evidence.
Both the short-term picture and the long-term picture are just about perfect for higher highs.
Let me explain...
In the short run, now is a good time to buy...
Investors are scared. We hit a "record" negative sentiment extreme, according to Jason Goepfert (of www.SentimenTrader.com). While you can measure this in a variety of ways, history tells us that almost all of those ways suggest a dramatically higher stock market 12 months from now. (We recently wrote about two of these reasons here and here.)
In the long run, the picture is pretty darn good, too...
Stock prices hit their ultimate peaks when:
Neither of those conditions are in place today. The simplest conclusions are:
We're somewhere in the middle... For example, our True Wealth value indicator (which is simply the price-to-earnings ratio PLUS short-term interest rates) actually says that stocks are hardly expensive. We are definitely nowhere near the valuation extreme we saw in the dot-com bubble in 2000. Take a look:
 We're definitely not at the bottom like in 2008-2009. But we're not at the top, either. Meanwhile, investors are not WILDLY OPTIMISTIC... They're still far from it.
One way to see this is by looking at consumer confidence versus the stock market:
 Consumer confidence peaked in the late 1960s, in 2000, and in 2007 – right in line with the major stock market peaks. Consumer confidence bottomed at stock market bottoms as well, in 1982, 1991, and 2009.
Today, we are clearly not at the bottom in confidence. But we're not at the top, either. This is not 2000.
Summing up, on both short-term and long-term indicators, stocks look just fine. They actually look like they have plenty of upside potential left.
The weight of the evidence tells me that now is not a time to bail.
Please follow your trailing stops, in case I am wrong... But the historical evidence is pretty strong here. Stocks could do very well over the next year. I feel confident – based on history – that we'll see higher highs in the U.S. stock market.
Good investing,
Steve
Further Reading:
On Tuesday, Steve shared one of the best opportunities for when the market recovers. "Most investors are focused on the U.S. today," he says. "But one of the biggest opportunities isn't at home... It's in Europe." Read his argument here.
Last week, Brett Eversole showed why investors shouldn't be scared of the next "big one" right now. "After a volatile two weeks, the popular opinion is that it could be starting now... But history says something entirely different," he says. Get the details here: Why Now Is the Time to BUY Stocks.
Market NotesA 'SECRET' WAY TO PROFIT OFF APPLE Today's chart highlights the recent "hidden" winner to benefit from one of Apple's latest innovations.
Regular readers are familiar with why we consider Apple one of the world's greatest businesses. The consumer-products giant is constantly growing and adapting. Its new Apple Pay application lets users load their credit, debit, rewards, and gift cards onto their phones. You don't have to pull out your wallet and fumble through pieces of plastic. You just wave your cell phone over the payment processor and the transaction is done.
As with any new successful trend, there are lesser-known companies positioned to profit. Take Vantiv (VNTV), for example. Vantiv is one of the leading payment processors behind Apple Pay. It's a classic "picks and shovels" company that helps Apple continue to innovate.
As you can see below, Vantiv shares have taken off. The stock is up nearly 50% since Apple Pay debuted last October... and it just struck a new all-time high. It's the latest hidden winner... and it comes at the hands of one of the world's most dominant businesses.
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