November 26, 2024

I have an older sister that I have advised for decades regarding her stock and bond investments. Maybe once or twice (at most) a year I take a look at what she owns and make recommendations. Last week I had her send me a current statement and what follows here is a synopsis of what I wrote to her and recommended.

This will be short…pretty much the big picture as I see it…

Further below I’ll be showing you the 3 major stock indices…All have had fairly straight up vertical runs since the early 2022 lows…and from that perspective, it would seem like, minimally, some sort of sideways-to-lower action is due in here somewhere. Question is, if lower, “How much lower?”, or, “seriously lower?”, or just a period where investors should do nothing, and just sit, and have no great immediate expectations, and wait for the next push higher? And of course, maybe there is the possibility that my general feeling that “everybody is long everything” is either wrong or NOT a red flag…and equities will just keep going higher and higher…Answer is…NO WAY TO KNOW…

All we have are impressions…Mine is that a year ago, NOBODY was bullish stocks…The brokerage houses were unanimously calling for the market to go NOWHERE in 2024…For real, the average forecast for all of them was up just 2% for the year…And here we are now ending up 25%...which is a BIG MISS…but just one more example of how wrong they perennially are…And NOW? They are all quite bullish going into 2025, with the general theme being, “The economy IS strong, and on top of that, Trump will be good for the economy!”, which is exactly why stocks rallied hard right out of the election…with this last rally further reinforcing the idea among all those FOREVER wrong way analysts and the investing masses that 2025 is going to be nothing but good…To which I ABSOLUTELY DISAGREE.

Bottom line. I think everybody IS “in,” and all hopped up on Nvidia, Chip Stocks, AI, Crypto, Gold, etc.…and feeling all but certain that owning stocks is a  “can’t lose” situation (which is quite different from when we were buying tech for you in 2022…and everybody THEN was freaking out about how semi-conductor stocks were a dark hole for money)…So, just telling it like I really think it is…not hemming and hawing…I think some big part of 2025 will be severely disappointing for them…that the markets ARE primed for the next big “dump,” which argues, at a minimum, that this is NOT where anybody should be buying ANY stock. And as to whether you ought to be selling anything or not, to me, it’s not “if”, it’s just a question of how much?

KEEPING IT SIMPLE…

4 charts here…The first 3 are the stock market indices, where the main thing I’d point out is that, while equities can certainly keep going, they HAVE had a fairly stout run…and that one of the “norms” after a big move IS a periods of sideways, or lower trading…

The last chart is the bond market…which is I believe, a roaring buy…having backed off in a big way for the past few years…DEAD opposite what stocks have been doing…which leads me to this simple ages old summary statement: SELL HIGH (STOCKS), BUY LOW (BONDS).

 
SELL HIGH?

SELL HIGH?

SELL HIGH?

BUY LOW?

Again…Stocks and Bonds have been going in dead opposite directions for the past two years. And Treasuries DO appear to have spent the past year forming a solid bottom…and in my opinion could easily trade back up to the 145-150 area within the next 12-18 months.

I am NOT an investment adviser…so this is NOT a recommendation for anyone’s portfolio…but my final recommendation to her was to sell roughly 30% of her stocks (some of the tech stuff up to 50%) and put the entire proceeds in 20-30 Year Treasury Bonds and/or Treasury Bond ETF’s.

Back to the present…AS FOR THE FUTURES MARKETS TODAY…

I remain bearish Stocks, Crypto, Gold, Cattle, Corn and Soybeans…and BULLISH THE TREASURY BOND MARKET.

At this very moment, prepping for a 7 hour drive I-75 drive (ugh!) tomorrow to spend TG in St. Pete with Big Sis, I am lasered in on the immediate action in Corn, and especially Soybeans, and sitting here thinking: There ain’t an end user on the planet that hasn’t covered their buying for the next few months (meaning there are “no buyers” here) as we are making new lows, that there are ”no” buyers thinking, “I need to buy more here.” And farmers, who have been holding, and holding and holding their Soybeans? THEY ARE NERVOUSLY WATCHING EVERY DOWNTICK HERE AND MUST, I BELIEVE, LEANING/MOVING MORE AND MORE TOWARDS ONE THING…THAT BEING…”I NEED TO START SELLING SOME”…And I’ve described this 50 times, but what I see next, and right now…during this thin holiday week…IS the beginning of a “falling knife” sort of market that has “no” buyers and an avalanche of selling.

 I CONTINUE TO RECOMMEND BEING SHORT CORN AND SOYBEANS HERE…AND PERSONALLY AM DOING SO SOMEWHAT AGGRESSIVELY…As always, I might be dead wrong…but I don’t know how far down we’ll go, but what I’ve drawn below IS my very definite expectation.

Call if you have any interest in doing any of this…or if you just want to tell me where I might be wrong…

Apologies for filling up your inbox so much lately…There is a lot happening right now…

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Soybeans, Corn, Bonds, Cattle, Gold