Our master trader called the 2008 crash… Now, he says stocks are about to tip over again… In the mailbag: “Be careful what you wish for”…
Back in January 2008, master trader Jeff Clark alerted readers to a coming crash…
Here’s what he wrote in the January 13, 2008 Pro Trader, an advisory from our colleagues at Stansberry Research.
Jeff wrote it for a trading audience. So it’s a little technical. But you’ll get the point…
I can’t say this is a bear market just yet. I’ll wait until the end of the month and see how the S&P 500 monthly chart stacks up against its 20-month exponential moving average [a trend indicator Jeff follows] before I make that judgment. But it sure looks like the bear is on the hunt.
Here’s what happened 14 months later…
The S&P 500 lost 53% from the start of 2008 to the bottom in March 2009.
Jeff says a similar pattern is taking shape on the S&P 500 right now.
That’s why today, we’re passing along an essay from Jeff – so you can hear it straight from him.
A lot of folks think he’s “fearmongering” over his bearish call on stocks. But we’ll let you make up your own mind on that…
Before we get to that, though, don’t forget… It’s not too late to watch the replay of last night’s special broadcast with Jeff.
More than 13,000 of your fellow readers showed up to learn exactly when Jeff believes the stock market will give way…
…and how to profit using the bear market strategy he’s honed over his 30-plus years as a trader. Watch it here if you missed it.
Now, over to Jeff…
Readers Think I’m Hyping the Coming Crash… Do You?
Jeff Clark, editor, Delta Report
“It’s all hype…” “It’s clickbait…” “It’s fearmongering…”
That’s just some of what folks are saying about my prediction that the stock market will crash this year.
I can’t blame them for being skeptical. After all, the financial industry is full of folks who make scary predictions just to capture headlines and get their “15 minutes of fame.”
But what if I’m not one of those people?
What if I’m just a guy who has been following the financial markets for nearly four decades?
What if I’ve made plenty of bold calls – many of which have been dead-on accurate?
And what if I’m noticing that many conditions in the stock market today are eerily similar to conditions that have preceded bear markets before?
Folks… that’s not fearmongering. That’s just suggesting that, as the storm clouds build in the distance, you may want to carry an umbrella.
Take a look at this monthly chart of the S&P 500 plotted along with a trendline called its 20-month exponential moving average (EMA)…
Longtime readers know I use this chart to define bull and bear markets. If the S&P 500 is trading above its 20-month EMA, stocks are in a bull market. If it’s trading below the line, the bear is in charge.
The MACD indicator at the bottom of the chart gives one of the early warning signs of a bear market.
Without getting too far into the weeds, if the black MACD line is trading above the red line, stocks are in a bull market. When the black line crosses below the red line, traders need to be on the lookout for the bear.
In 2000 and 2007, notice how the MACD indicator gave us that “bearish cross” from extremely overbought conditions. In both cases, the S&P 500 dropped into a bear market a few months later.
Of course, you’ll notice the S&P 500 also dropped below its 20-month EMA in 2010 and 2011.
But in both cases, the MACD was more neutral than overbought. There wasn’t a bearish cross in 2010. And in 2011, the bearish cross reversed just one month later.
So, we didn’t have the conditions necessary for a bear market.
The MACD indicator finished a bearish cross last November. And it hasn’t reversed yet (as it did in 2011).
That’s a warning sign.
The S&P 500 has recovered from December’s breakdown. And in April, it managed to make a new all-time high. But that action has created negative divergence on both the MACD and Relative Strength Index (RSI) indicators.
Negative divergence – when a chart makes a higher high but an indicator makes a lower high – tells us that the momentum behind the rally is waning.
It’s a sign of a potential change in trend from a bull market to a bear market.
That suggests to me that the stock market may be heading for a crash later this year. And as you know, I shared a few more reasons in a special broadcast last night.
For now, the S&P 500 is still trading above its 20-month EMA. So, the bull market is still intact. But there are plenty of caution signs.
So, like I said, you may want to carry an umbrella. You know… just in case.
Best regards and good trading,
Editor, Delta Report
P.S. Last night, I (Jeff) laid out my full case for a 2019 stock market crash.
If you’re invested in U.S. stocks, everything you’ve built over the past 11 years is at risk. And I know the one technique you need to use to protect yourself, and profit, when (not if) the market crashes.
During last night’s broadcast, I showed people like you what it is and how to start using it. And for a few days only, you can watch a replay. You won’t have many more chances to learn this technique…
Last Wednesday, we introduced you to our newest addition at Legacy Research – Jeff Brown’s free e-letter, The Bleeding Edge. And one of your fellow readers is putting it to good use…
Just wanted to say thank you kindly for The Bleeding Edge. I’m not rolling in cash and what I do have is locked up in various investments – heavily in the crypto space. So I greatly appreciate this insight and that you are good enough to not charge for it. I know it has significant value.
I’m also teaching myself online, through a couple of entrepreneur-run tech academies, how to program and specifically how to program blockchain and smart contracts. So I really appreciate this insight.
My eventual goal is to get myself skilled enough to do machine learning and artificial-intelligence algorithms. It’s what I have a passion for. And it will help me get out of my 9-5 rut of being an office bureaucrat, thanks to the mistake I made of formal university education (lol!). Big thank you, again, and I look forward to reading!
– Brendan V.
Meantime, the conversation about win-win versus win-lose deals continues – this time sparked by Legacy Research cofounder Bill Bonner’s essay “The Nice Thing About Donald Trump” in his Diary e-letter…
Dear Bill, I’m from England and I do like reading your Diaries. However, I do tend to agree with those who caution dealing with China. A win deal for China is, so it appears, global hegemony.
Are you suggesting the U.S. can offer that for cheap goods and claim a win-win deal? As they say, if you sup with the Devil, ensure you have a very long spoon. Personally, I’d just decline the invitation.
– John O.
Finally, on Tuesday, we turned to a big question from Cut readers… Isn’t 5G bad for your health? And we showed you why the rumors are part of an international conspiracy.
But not everyone is convinced…
It may be inevitable, but that doesn’t mean there won’t be unintended consequences. Cell phone use is less than 20 years old. It takes that long for the brain tumors to begin appearing. 5G uses what was considered until now to be weapons-grade frequencies. We will all be bathed in high-energy radiation.
I suggest having a look at a video called, “5G Apocalypse.” Hear it from the scientists and doctors themselves. Be careful what you wish for.
– Michael W.
Is the 5G Apocalypse real? Will Trump win the trade war with China?
We want to hear from you. Write us at [email protected].
And send us any questions you have, too… We give answers from the Legacy team in our mailbag editions every Friday.
May 23, 2019
Master trader Jeff Clark predicted the 2008 crash…
Now, he’s urging all Americans to brace for a market move that could either destroy your savings… or make you a fortune… If you’re ready.