Time to Gear Up for a Collapse?

Here's how to know when to get out or get short… July 02, 2021 UNSUBSCRIBE | ARCHIVES Time to Gear Up for a Collapse? External Advertisement Not Crypto Rich? Watch This… 1,728%… 3,976%… 17,613%... and 38,055%. Those are recently posted gains from Teeka Tiwari’s cryptocurrency recommendations. There are no promises you can expect gains that high… But incredibly… He’s giving away the name of his next top pick for FREE! A coin he believes could follow in Bitcoin’s footsteps to become Crypto’s Next-Trillion Dollar Coin. Click Here to Get Its Name (For Free)  Dear Money & Crisis Reader, Yesterday I outlined how stocks were extremely overextended above their 50-month moving averages (MMA). By quick way of review: The S&P 500 is currently some 40% above its 50-MMA. Historically, the market had been more stretched than this only five times. Of those five times, only once did stocks continue to rally significantly (36% at the height of the Tech Bubble in 1999). Every other time, the market either corrected 10%-plus (three times) or rallied a small amount before correcting over 10% (once). Based on this analysis, it is tempting to sell everything and start going short. This would be a major mistake. It is never smart to short the market based solely on it being overstretched. Case in point, of the four times the market had been more stretched than today and corrected, stocks took several months before they made their move. Let me show you… In July of 1997, the S&P 500 was 52% above its 50-MMA (blue line in the chart below). This was truly an EXTREME overextension by stocks. But those who bet on a collapse didn’t make much money, if any. True, the S&P 500 eventually corrected by about 11%, but that correction took three months to manifest… AND the stock market recovered most of the losses the very month that the correction took place (red oval in the chart below). So, if you bet on a collapse in July, you had to sit through three months of making nothing at best and losing money at worst (depending on whether you simply shorted stocks or used options) before you got paid… And even then, you only had a small window to collect your profits before stocks began to recover. Trump’s Final Gift To America There’s a little-known way Trump could – one day – have his revenge. It involves a Federal Ruling he oversaw in the final year of his Presidency that could change America forever… unleash an estimated $15.1 trillion in new wealth… and create countless ways for everyday Americans to benefit. What is this little understood decision? And how will it impact you? All the important facts are here. Again, it is NEVER a good idea to bet the farm on a collapse simply because stocks are extremely stretched from historic levels. Instead, you should ONLY short once the market begins to do “something wrong” — by breaking below critical levels of support. Following a risk management strategy, a trader would have potentially shorted the S&P 500 in early August of 1997 based on the market’s break below critical support (green line). That trade ultimately wouldn’t have worked out, but the loss would have been minimal. The same trader would have tried shorting again in October when stocks again took out critical support. That trade would have worked out much better. So again, this illustrates that you should NEVER bet the farm on a collapse. At best you should make a calculated trade and ONLY when the market starts to do something wrong by breaking critical support. In terms of today’s market, this would mean possibly shorting the market once stocks take out critical support at 4,240 (green line in the chart below). That’s it for today. Enjoy your 4th of July holiday weekend! Best Regards, Graham Summers Editor, Money & Crisis Are You Prepared for America’s Death Spiral? The prophetic analyst who predicted the subprime mortgage meltdown… the financial crisis of 2008… the Greek sovereign debt crisis… and Brexit… Just issued another dire warning… About a $7.4 trillion financial extinction event he sees coming on July 14th, 2021... A cataclysmic event he says will lead to widespread bank failures… A 70% stock market decline… Food shortages... And violent social unrest that leads to martial law. He’s urging Americans to take 4 simple steps to prepare today. Click here to discover more details. To end your Money & Crisis e-mail subscription and associated external offers sent from Money & Crisis, feel free to click here. If you are having trouble receiving your Money & Crisis subscription, you can ensure its arrival in your mailbox by whitelisting Money & Crisis. Money & Crisis is committed to protecting and respecting your privacy. Please read our Privacy Statement. 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