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Are you listening now? | The Crux



From Dr. David Eifrig’s Health & Wealth Bulletin:

If you’ve been deeply hurt by the market over past few weeks, you haven’t been listening…

The S&P 500 is down 8% for the month and it’s down 8.5% from its 52-week high. We’re approaching correction territory but haven’t hit it yet.

On the other hand, tech stocks are in a bona fide correction. The tech-heavy Nasdaq Composite Index has fallen 11% in October and it’s down nearly 12% from its 52-week high. It’s been brutal.

In fact, the Nasdaq is on pace to post its worst month since late 2008. Back in October of that year, the Nasdaq fell a whopping 17.7% and 10.8% the following month. Depending on how the index closes later today, October should finish right in the middle of those two months.

The past four weeks certainly haven’t been kind to the tech giants either. We’ve seen Amazon shed more than 23% of its share price. Even Google’s hasn’t stayed out of the selling, dropping 13%. And Netflix has been absolutely crushed – down nearly 24%.

This has been one of the worst months in terms of stock performance over the past decade… But if you’ve been following us closely, you shouldn’t be surprised. And if you’ve lost 15% or more in your own portfolio, you haven’t been listening.

We’ve been preparing for this.

Over the past few months, regular Health & Wealth Bulletin readers know that I’ve gotten cautious about the stock market. Even while I was encouraging readers to take advantage of Steve Sjuggerud’s “Melt Up” recently, I mentioned my hesitations about the market, pointing out how there were a ton of red flags. I’ve been talking about these warning signals, whether debt or valuations or inflation, for a while now. I hope you’ve been following my advice and pared back some risk.

Now before anyone accuses me of playing both sides, let me explain…

I agree with Steve Sjuggerud that the market is likely to explode higher before the big crash. There’s going to be great gains.

Investors should have a bet on the Melt Up… But it should be a reasonable bet. My past experiences tell me that when there’s a fantastic money-making opportunity like the Melt Up, folks will throw caution out the window and push all their chips in the middle of the table.

Don’t do this.

Only a portion of your portfolio should be allocated to bullish bets right now. Even with a conservative portion of your portfolio betting on the Melt Up, you’ll make a ton of money if Steve is only half right.

You don’t need to risk everything.

I’ve seen it far too many times when investors take advantage of a great market call like the one Steve is making, and then ride the market all the way down. They don’t know when to get out.

That’s why I’ve been writing about all the different risks in the market for the past few months. I’ve been urging readers to get defensive.

You’ll make money in the Melt Up, I’m confident of that. But I don’t want you to lose it all in the “Melt Down.” My job is to make sure you understand the whole picture and help you allocate your money accordingly.

I always recommend that investors spread their money between a few asset classes. You should be invested in stocks, fixed income, cash, and chaos hedges.

If you take one thing from today’s issue, it’s that you should move some of your portfolio to cash. Have some money on the sidelines. It could be sitting in a money-market fund or in a certificate of deposit (CD). When the crash happens, you’ll be relieved you have some of your money parked there.

And now is also the time to increase your position in chaos hedges. Chaos hedges are protection for when things in the economy get really bad. Gold, for example, is a chaos hedge.

Earlier this month I told my Retirement Millionaire subscribers to buy gold. The timing was right. Since that issue came out, the price of gold is up nearly 3%.


It’s not hard to figure out that when stocks go down, people buy gold, which pushes the price up. It’s important to buy before the big market crash. I don’t think this is the big market crash right now – just a normal correction. But in this case, it’s better to be early than late.

Based on the way things have gone this year, it appears volatility is here to stay. That plays into Steve’s Melt Up thesis. Have a portion of your portfolio invested in Melt Up stocks. Just to reiterate, a portion… Not everything you have.

Volatility also means that there’s going to be more market downturns… Including the bear market we’re all fearing. Now is the time to get ready. Increase your cash position, buy some gold, buy some safe bonds, and hold only your highest-conviction stocks.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team

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Charts show steady investor optimism, more upside for stocks




The stock market rally that began 2019 has not yet run its course, even with Tuesday’s Washington-induced surge, CNBC’s Jim Cramer said after consulting with technician Carley Garner.

“The signs suggest that this market can have more upside before the rally exhausts itself,” Cramer recapped on “Mad Money.” “Eventually the market will become too optimistic and stocks will peak, but we’re not there yet.”

Garner, the co-founder of DeCarley Trading and author of Higher Probability Commodity Trading, has an impressive track record. In mid-December, one week before the Christmas Eve collapse and subsequent rebound, she told Cramer that pessimism was peaking and stocks were due for a bounce.

But now that the S&P 500 has gained over 15 percent since those midwinter lows, it’s worth wondering the reverse: what if optimism is approaching its peak?

Lucky for Wall Street, Garner says it’s not. She called attention to CNN’s Fear and Greed index, which uses a variety of inputs to measure what CNN sees as investors’ chief emotional drivers.

Right now, the index sits at 67 out of 100, signaling more greed than fear, but still “a far cry from the extreme levels where you need to start worrying,” Cramer explained. When the major averages peaked going into the fourth quarter of 2018, the index hit 90, and according to Garner, “we usually don’t peak until we hit 90 or above,” he said.

Add to that the fact that only half of professional traders and investors polled for the most recent Consensus Bullish index said they felt bullish; the recent downtrend in the Cboe Volatility Index, which tracks how much investors think stocks will swing in the near future; and that, historically, this is a good time of year for stocks; and Garner sees more momentum ahead.

The S&P 500’s technical charts seem to uphold Garner’s theory. Its weekly chart shows fairly neutral readings for two key indicators: a momentum tracker called the Relative Strength Index and the slow stochastic oscillator, which measures buying and selling pressure.

“Even if the S&P 500 keeps climbing to, say, … 2,800 — up 2 percent from here — Garner doesn’t anticipate either the RSI or the slow stochastic [to] hit extreme overbought levels,” Cramer said, adding that the technician could even see the S&P climbing to 3,000 if it breaks above the 2,800 level.

If Garner is wrong and the S&P heads lower, she said it could trade down to its floor of support at 2,600, and if it breaks below that, fall to 2,400. But that scenario is highly unlikely and, if it happens, would be a buying opportunity, she noted.

The S&P’s monthly chart told a similar story, Cramer said. The index is currently trading at 2,746, between its “hard ceiling” at 3,000 and its “hard floor” of 2,428, he said, which means it’s “basically in equilibrium.”

“To Garner, that means going higher is the path of least resistance for the S&P,” the “Mad Money” host said. “Once the S&P climbs to 2,800, or perhaps … to the mid-2,900s, that’s where Garner expects things will turn south and the pendulum will start swinging in the opposite direction.”

“Remember, … Carley Garner has been dead-right, and the charts, as interpreted by Carley, suggest that this market still has some more upside here,” Cramer continued. “But if we get a few more days like this wild one, she thinks we’ll need to start worrying about irrational exuberance. For now, though, she thinks we are headed higher, and I agree.”

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Daniel Ek, chief executive officer and co-founder of Spotify AB.

Akio Kon | Bloomberg | Getty Images

Daniel Ek, chief executive officer and co-founder of Spotify AB.

Cramer said Wall Street has misread Spotify‘s latest earnings report and guidance, and that misunderstood stocks like these give investors an opportunity to make some money.

he called out stock analysts like Everscore ISI’s Anthony DiClemente who have downgraded the equity over concerns about subscriber growth.

“I think this is lunacy,” said Cramer, who has been bullish on the music streaming platform since it went public last April. “It’s like the market just doesn’t know how to read this company or its quarterly guidance. In my view, Spotify is very much on the right track.”

The stock was rocked after a seemingly mixed quarterly earnings released Wednesday, Cramer said. After Spotify reported lower-than-expected sales, tight cash flow and conservative guidance across the board including subscriber growth, shares sold below $129 at one point in Thursday’s session.

But Cramer noted that the company beat expectations on operating profit and gross margin, which was 120 basis points higher than was asked for.

“I think the sellers were missing a lot of context here and the context is something I like to talk about a lot and it’s called UPOD. They under promise … and then they over deliver,” he argued. “At this point, CEO Daniel Ek and his team have established a track record of giving cautious guidance—under promise—and then beating it—over delivering.”

Spotify’s guidance includes planned investment costs and the company could “become the premier platform for podcasts,” a hot market for hard-to-reach millennials, Cramer said.

Click here to read Cramer’s full take.

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Charts show investors ‘can afford to be cautiously optimistic’




Investors can afford to be “cautiously optimistic” at this point in the stock market’s cycle, CNBC’s Jim Cramer said Tuesday after consulting with chartist Rob Moreno.

Moreno, the technician behind and Cramer’s colleague at, sees a convoluted path ahead for stocks. After calling the December bottom, Moreno noticed that the Nasdaq Composite’s late-2018 decline was about a 24 percent drop from peak to trough.

That’s important because, in a bull market, stocks tend to see “periods of consolidation — pauses in a long-term bull run,” Cramer explained. “To [Moreno], the decline here looks very similar to what we saw from the Nasdaq in 2011, 2015 [and] 2016,” three consolidation periods of recent past.

If he’s right, that could be bad news for the bulls, who may have to wait at least seven months for stocks to break out of their consolidation pattern, during which they tend to trade in a tight range, Cramer warned. But Moreno still sees some opportunity for investors.

“If you believe his thesis about the market — that we’re in a consolidation period, one that will last until September — then you can afford to be … cautiously optimistic right now,” Cramer said on “Mad Money.”

Part of Moreno’s confidence came from his analysis of the S&P 500’s daily chart, which also included the support and resistance levels from its weekly and monthly charts.

Even after a 16 percent rally from its December lows, Moreno saw more room to run for the S&P based on its Relative Strength Index, or RSI, a technical tool that measures price momentum. The RSI, he explained, hasn’t yet signaled that the S&P is overbought, and the Chaikin Money Flow, which tracks buying and selling pressure, shows big money pouring in.

“Moreno thinks that these new buyers are the kind of investors who won’t be panicked out of their positions by short-term volatility,” Cramer said, adding that the technician sees about 3.5 percent more upside for the S&P before it hits its ceiling of resistance at 2,818.

But if the S&P manages to trade above its ceiling of resistance and return to its October highs, Moreno expects a “synchronized reversal” in the stock market that could crush the major averages, the “Mad Money” host warned.

“At least until September, Moreno says you should be a seller if the averages approach their October highs — that’s around 2,930 for the S&P 500,” Cramer said. “Eventually he expects a breakout from these levels, but it won’t happen any time soon.”

So, what’s the right move for investors? According to Moreno, not all is lost. He still expects to see strong gains — a roughly 7.5 percent move — before the current rally peters out. But he doesn’t want buyers to get too trigger-happy, especially considering the months of sideways trading he’s predicting for 2019.

“Until [September], he expects the market to trade in a fairly wide range, with the S&P bouncing between 2,350 and 2,930. For now, we’re headed higher, but he says you should use these key levels as entry and exit points until the consolidation pattern finally comes to an end later this year and the averages resume their long march higher,” Cramer said. “Even if he’s right and this rally will lose its steam after another 7.5 percent gain, that’s still pretty good, but I am very wary and it makes me want to do some selling after this run.”

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