These Clues Show Us Where the Market Is Heading Next

This sector is sending a positive message for stocks. [Jeff Clark's Market Minute]( These Clues Show Us Where the Market Is Heading Next By Clint Brewer, analyst, Market Minute Both market optimists and doomsayers are out in full force following the recent economic data. Their goal is to determine whether the stock market is headed for a boom or bust. And there’s plenty of evidence for either camp. The payrolls report for January showed that 517,000 jobs were created – that’s more than double economists’ estimates. This suggests a “soft landing” for the economy where a recession is avoided. But that puts pressure on the Federal Reserve to keep raising interest rates in a bid to cool the economy and keep lowering inflation. We saw how stocks responded to that last year with a 19% drop in the S&P 500. For investors, it might seem like a coin flip to know which camp will prevail. But instead of turning trading into guesswork, there’s a better way to discover a clearer picture of where things are heading. You just have to sift through the clues being left by the stock market… because buried within the market’s sector trends, price is telling you what lies ahead. Recommended Link [“America’s SECRET Financial Crisis”]( [image]( PhD & former Goldman Sachs managing director reveals: [“The biggest heist against the American people, in history.”]( A strange force quietly creeping under the roots of the U.S. financial system that soon may transfer $40 trillion out from under America’s middle class… Funneled to the financial elite. One of the nation’s leading economists traveled to Delray Beach, Florida to uncover exactly what’s happening. She says: “This is NOT a historic crash… it’s NOT inflation… it’s FAR worse… A reshaping of our global financial system has ignited a $40 trillion transfer of wealth from the middle class to the rich… that could forever split the entire nation into two groups… [‘the new rich’]( or [‘the new poor’]( – you will have to make a choice.” [Click Here To Watch.]( -- Follow the Leaders The stock market is a discounting mechanism for future business conditions. That means the market typically turns before key inflection points in the economy. And just as the market can reflect the state of the economy, certain sectors can tell you about the health of the stock market. For example, last year it was defensive groups like consumer staples leading the way. When companies that are known for being recession-proof are holding up the best, it can be a bad sign of things to come. You can see that in the chart below, which plots a ratio of consumer staples stocks against the S&P 500… [(Click here to expand image)]( A rising line means staples are outperforming, and vice versa. You can see that consumer staples took the lead and crossed above the 200-day moving average (MA – orange line) back in January 2022 just as the bear market got underway (red circle). Just like how defensive groups can signal a bad market incoming, there are industries sensitive to positive developments in the economy. When they perk up, it can be a good sign of things to come for stocks. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. The Message from an Economic Bellwether Companies in cyclical areas of the economy can deliver timely insights about the stock market. It’s also a way of evaluating markets that’ve been around for a hundred years. You might have heard of something called “Dow Theory”… It’s a framework built on the research of Charles Dow, who in the late 1800s would confirm (or deny) bullish action in the stock market by looking at railroad companies… a new and innovative industry at the time. The rationale is simple. Good times coming for the economy would surely be reflected by railroad stocks discounting a boost in profits ahead. These days, semiconductor (or chip) companies are among those most sensitive to changes in the economy. That’s because chips are the building blocks of our electronic devices. To see what I mean, take a look at what’s been happening in the chips sector. The chart below shows the ratio of chip stocks to the S&P 500… [(Click here to expand image)]( After bottoming in October, chip stocks have outperformed the S&P 500 and sustained a crossover above the 200-day MA in early January as the market was heating up (red circle). [$19 Makes Your Trading Bulletproof? (From The Man Who Doubled His Money 12 Times in 2022)]( So, while warning signs over the economic outlook are abundant, the message coming from the stock market is clear. The trend of rallying stock prices is being supported by the right sectors, and signals more gains are in store. Best regards, Clint Brewer Analyst, Market Minute Reader Mailbag In today’s mailbag, a [Currency Trader]( member shares their experience… I am excited about trading the Currency Trader. I have done options, but they are expensive for me, and I’m happy to hear I can start low and build up. I believe I can trust what you say, and I’ll follow your instructions. Thank you and have a great weekend. – Bobby H. Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com. In Case You Missed It… [Controversial millionaire trader who predicted the crash of 2008, 2020, and made a fortune off the “dot-com” collapse reveals…]( Little-Known Financial Move Lets You Collect $1,000s or more in income – over and over again – no matter what happens in the market! [Click here – And watch this LIVE demonstration to learn how!]( [image]( Get Instant Access Click to read these free reports and automatically sign up for daily research. 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