EDITOR'S NOTE: Market forecasts come a dime a dozen, especially among so-called “experts.” We don’t always look for who’s more often right than wrong, as hardly any investor can keep an accurate count of an analyst’s win rate. We do, however, pay attention to unique approaches to market forecasting; different yet rationally-sound ways of slicing and dicing market action. So, what might you think about the intermarket relationship between the Industrial and Tech sectors? Greg Diamond, writing for American Consequences, claims that the two largest stocks in the sector make a strong indicator for what’s to come. He even attempts to time the next crash. Might you agree with him? Check it out for yourself.
Greg Diamond has a bit of a reputation around our offices here in Baltimore…
First, he’s a super smart guy with incredible technical analysis experience and knowledge. He holds the esteemed Chartered Market Technician designation, and has almost two decades of experience managing multimillion-dollar portfolios across every asset class.
But perhaps more importantly, Greg predicted the March 2020 COVID crash to the very week – months before it happened.
Think about what you would have done differently, or how you would have handled your investments, if you’d known in advance that the market was going to tank the way it did in 2020…
For one thing, you could have doubled your money eight different times with Greg’s recommendations that year, without buying a single stock. In fact, his subscribers could have tripled their money in six days as the crash unfolded.
On March 23, 2020, the Dow closed nearly 2,000 points lower than its previous high. That was the day the market bottomed… a final and devastating blow after many folks had already lost a fortune.
But what’s past is past, right? We’ve just begun 2022, and things are looking up… The economy is rebuilding, COVID vaccines have been developed and distributed, and wages have increased…
Unfortunately, Greg says “not so fast.”
He’s predicting a huge event is coming to America this year, which will take most people completely by surprise.
Greg warns, “If you thought 2020 was strange, just wait for what’s coming in 2022.”
He’s so confident in his call for what’s coming this year that he’s holding a special event next week on Thursday, January 13 at 8 p.m. Eastern time.
Greg will give you the full story that night, in addition to a free recommendation just for joining. You can sign up for free right here.
Today, we’re sharing this must-read essay from Greg, which illustrates how history is saying we’re in for a bumpy ride in the next few months…
This Is How Bull Markets End
Based on history, I’m seeing the same price action that usually marks the end of a bull market (I’ll explain this more below). So this is something to keep in mind as we continue to witness stocks rocketing to new highs.
But let me first back up for a second…
A few months ago, I attended the annual Stansberry Research Conference in Las Vegas. It was nice to interact with other humans for the first time in a while.
One subscriber I spoke with thanked me for a book I recommended a long time ago. He said it really changed the way he looked at markets and how they interact with one another.
That book is Intermarket Analysis: Profiting from Global Market Relationships by John Murphy.
It’s a great read that dives into how markets behave. And most importantly, it explores the warnings that pop up at the end of big moves, which is exactly what I want to cover today…
History Is Repeating
I’m going to analyze two big stocks today… Caterpillar (CAT) and Microsoft (MSFT).
These stocks represent different sectors of the economy, and when they’re rallying together, it’s a sign of strength. When they’re not, it’s usually a warning.
Right now, we’re seeing a very wide divergence…
It’s a simple analysis here, as CAT (in black) has failed to achieve new highs after topping out in May and June of this year… while MSFT (in blue) has skyrocketed to new highs lately. Notice the green circle on CAT as it attempts to make a rally recently.
Now, look at this chart from 1999 to 2000…
The price action in the first half of the chart is almost identical… CAT topped out in May and June of 1999 and traded down, while MSFT skyrocketed to new highs (just like it’s doing right now). Note the green circle on CAT back then. It’s the exact same price action as now – an attempt to rally that failed.
Ultimately, as you can see above, this wide divergence between CAT and MSFT led to a massive crash and big bear market.
This time frame should raise some eyebrows for any of my Ten Stock Trader subscribers, as it’s the same time frame and market analog we’ve been watching in the Nasdaq 100 from back then to now.
The price action in the Nasdaq 100 from 1998 to 2000 and from 2020 to 2021 are still very much in sync.
So when I lined this up with what happened between CAT and MSFT back then and now, it gives me more evidence that history is indeed repeating.
All is not well under the hood of the stock market.
What else does it mean for the market if this analog continues?
It means I’m expecting this bull market to end by February or March 2022.
Yup – that’s a bold prediction, I know.
But let me explain further…
This analog has been on point for about a year now, so there’s no reason for me to doubt it. If I see things break down from a historical perspective, then I’ll bail on this outlook.
I say it often – be unbiased and let the price action guide you.
Right now, that price action is repeating in such an unbelievable fashion that I cannot ignore it. Again, look at the two charts above side by side and really ask yourself if you can ignore it… I can’t.
It’s one thing to see the analog take shape with the current market environment in the Nasdaq 100 index alone. But it’s even more important to see how stocks like CAT and MSFT are acting in the exact same way now as back then. Again – it’s more evidence that history is repeating.
So prove me wrong, Mr. Market… But for now, I’ll respect your history.
P.S. Make sure you’re signed up for Greg’s special free presentation next week. He’s going to explain his winning strategy and share the exact day stocks will plummet in 2022. Click here to reserve your spot for this can’t-miss event.
Managing Editor, American Consequences
With Editorial Staff
January 7, 2022
Originally posted on American Consequences.