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'Melt Up' Update: ALL CLEAR Again

By Dr. Steve Sjuggerud
Tuesday, December 5, 2017

"The First Threat to My 'Melt Up' Thesis Is Here," I wrote in DailyWealth last month.
 
I'm watching five specific early warning indicators for the "Melt Up" – the last explosive stage of this bull market. These indicators will let me know in advance when the Melt Up is on its last legs.
 
Since I first published those indicators in my True Wealth Systems letter, none of them was ever a threat. All of them were "all clear."
 
But last month, that changed...
 
I shared one of those indicators with you here in DailyWealth – a specific move in shares of transportation companies (like railroads).
 
You see, transportation stocks thrive when the economy is strong and goods are moving from place to place. When the economy slows down, transports are one of the first places it shows. It's an early warning sign for the stock market... like a canary in a coal mine.
 
Last month, I wrote:
 
You probably know that the overall stock market peaked in 2000. But you probably don't know that transportation stocks peaked in May 1999 – long before the overall market did.
 
The same thing happened in 2007. The overall market peaked in October 2007. But transportation stocks peaked months earlier, in July.
 
Today, we're seeing the first sign of underperformance in transports.

At the time, I was specific in my advice. It was the first sign of weakness... But it wasn't the end. As I said then:
 
While underperformance in transports is a good early warning sign, it's not a sell signal...
 
First, this is just one of the five indicators. Secondly, transports could still turn around and hit new highs, wiping out this short-term concern. And lastly, the overall market has typically peaked months after this early warning signal flashed.

Today, I'm pleased to report that we are back to "all clear" on this indicator. Transportation stocks have now broken out to new highs. Take a look:
 

In short, the threat I wrote about a month ago is now fully behind us. Transports are healthy today.
 
My goal is to maximize your gains in the Melt Up – with minimum risk. Early warning indicators like this can help us identify when the top is getting close. Based on this one indicator, we're not there yet.
 
This is only one of five early warning indicators that I follow in my True Wealth Systems newsletter. The next issue comes out this Thursday. In it, I'll update subscribers on all five of our indicators.
 
Check out the upcoming issue to find out what they say...
 
Good investing,
 
Steve




Further Reading:

"My job today is to help you maximize your gains – and let you know when it's finally time to pull the plug," Steve writes. Transports are healthy again. But as he said last month, investors need to know how to respond to early warning signals. Learn more here.
 
While U.S. stocks will soar during the Melt Up, Steve also sees major opportunities abroad right now. One of these is a country setting up for an economic boom. But most Americans don't know about it – yet. Read more here.

Market Notes


AMERICA IS BETTING BIG ON WALL STREET

Today's chart shows that the gamblers are back in the Wall Street "casino"...
 
Longtime readers know that some of the world's most popular gaming stocks have surged higher this year. Wynn Resorts (WYNN) is up more than 80% since January. People have enough cash on hand to spend lots of it on gambling. And similarly, stock traders are rushing in from the sidelines...
 
Discount online brokers such as Interactive Brokers (IBKR), E-Trade Financial (ETFC), and TD Ameritrade (AMTD) are riding this trend. Last quarter, Interactive Brokers increased its customer accounts by 24% year over year to 457,000. TD Ameritrade had a strong quarter, too... Its sales jumped 18% from the same quarter last year to a new record high. And E-Trade's total sales grew 23% year over year to $599 million last quarter.
 
As you can see in the chart below, shares are soaring as a result. Interactive Brokers has led the charge, up around 60% this year. As the bull market rages on, Americans will likely keep betting on Wall Street – and these online brokers should continue to thrive...
 

premium teaser

Earn 3.7% while betting on this pharmaceutical giant...
 
My early warning signs say we still have time to make big profits in the Melt Up. And Dave Eifrig recommends owning a pharmaceutical behemoth to take advantage of it...
 

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