The Bear Tracks Are Back

An old, familiar story... Stocks and bonds are down... The bear tracks are back... Follow the 10-year U.S. Treasury yield to victory... What to do today... Robert Kiyosaki talks spy balloons... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] An old, familiar story... Stocks and bonds are down... The bear tracks are back... Follow the 10-year U.S. Treasury yield to victory... What to do today... Robert Kiyosaki talks spy balloons... --------------------------------------------------------------- Today's market action told an old, familiar story... Stocks were down. Bonds were down. And the U.S. dollar was up. Based on those points alone, it could be 2022 again. After all, that's what happened for most of last year – if not the entire thing, in some of those cases. But of course, it's not 2022 anymore. It's 2023. And what happens next remains to be seen. In the short term, the market is playing out as we expected... I (Corey McLaughlin) said in the February 2 Digest that [stocks might be due for a pullback]( after one of the best January performances on record. And that's happening now... On February 2, two major U.S. indexes made their most recent highs. Since then, the benchmark S&P 500 Index is down roughly 4%. And the growth-heavy Russell 2000 Index has fallen almost 6%, including a nearly 3% fall today. The Dow Jones Industrial Average, meanwhile, has traded mostly sideways in recent weeks. But it has lost roughly 3% over the past few trading days. And as I said, stocks aren't the only things that have turned back to "bear" mode lately... Bonds are going bearish, too... Remember, bond prices and yields have an inverse relationship. When one goes up, the other goes down... and vice versa. The 10-year U.S. Treasury yield is up from around 3.4% at the start of February to 3.9% today. And it's almost back up to its October and November highs. Given the inverse relationship, that means bond prices are down over that span. This move could be a big warning sign for stocks... Over the past 12 months, we've noted several times how the bond market has been "ahead" of the stock market when it came to pricing in things like Federal Reserve interest-rate plans and their influence on the economy and the markets. You may also remember stocks hit their most recent bottom in October – back when yields were previously at the levels they're almost returning to right now. As we'll discuss in a moment, a clear relationship exists between bond-yield spikes and stock sell-offs over the past 12 months. And now, yields could be going even higher... Forget rate cuts. According to global-markets company CME Group's FedWatch Tool, a majority of bond traders now expect three more 25-basis-point rate hikes from the Fed. And these traders expect the rate-hike environment to last through at least July. That would put the federal-funds rate near 5.5%. And notably, that's 50 basis points higher than these same traders expected one month ago. The latest shift in market expectations came after recent inflation and jobs data appeared stronger than wanted in spots. And of course, the ensuing Fed commentary weighed into the shift as well. The U.S. dollar rallying as of late – up 3% this month – reflects the same idea of higher rates from the Fed. And it continues to show that the dollar remains uncorrelated with stocks, which was a major story of 2022. Pay attention to this market action... We can't know for sure what will happen next. But I would urge anyone to at least take today's market behavior into consideration... The bear tracks are back – at least temporarily and perhaps for longer... Our colleague and Ten Stock Trader editor Greg Diamond looked at what's happening through his technical-trading lens earlier today. And in his Weekly Market Outlook, he shared some more thoughts on this idea with his subscribers. Specifically, Greg wrote something at the start of the write-up that resonated with me... The higher that stocks have rallied this year, the more bearish I've become. Recently, I said something similar on the Stansberry Investor Hour podcast with Dan Ferris. The quicker more people became bullish at the start of the year, the more concerned I get that the market could be due for another significant pullback. It's simply too early for us to officially declare the bear market dead. Some evidence to the contrary exists, of course... After all, stocks have rallied since last fall. And the major U.S. indexes have broken above their long-term trend lines – as measured by the 200-day moving average – for an extended period. That's different than the "bear market rallies" we saw in 2022. [We've also talked here]( about how a recession might've already been "priced in" to the markets. But importantly, I'm not sure the potential consequences of a recession – or higher-interest-rate environment – have been fully reflected in the markets. But then, there's a big elephant in the bull-versus-bear argument. And it's maybe the most important point... The major U.S. indexes also haven't made new highs yet. That's what normally happens in bull markets. Greg believes we could still see a market low this year... I don't want to give away too much from the research he sent to paid subscribers and Stansberry Alliance members this morning. But in short, Greg analyzed a big "divergence" in the price behavior of two stocks he uses as indicators in his trading. One recent market leader hit what appears to be a recent "top." And the other popular stock from a growth sector keeps trending down and hasn't made a recent new high. In other words, one sector – represented by the recent market leader – is doing one thing... as another sector – one of the most popular in the economy – is doing something else. This is a "divergence"... And it once again shows us that we're not in a rip-roaring bull market. It's why Greg reminded his subscribers that market bottoms are a "process." And he doesn't think the process is over yet. In fact, as he wrote today, the time frame for that low might be a few months away – or possibly many months away. And he explained why he's standing by an "updated, bearish approach." Follow the 10-year Treasury to victory... The behavior of bonds is another big reason why Greg remains bearish. As he told his Ten Stock Trader subscribers... I want to update you on the U.S. 10-year interest rate and what it could mean for stocks. Check out this chart... This interest-rate chart goes back to March 2022... I've highlighted consolidations (in red), breakout points (in black), and the sharp rallies in blue. You can see that each consolidation was followed by a breakout. As the chart shows, these breakouts (combined with a rally in interest rates) led to a significant drop in stocks. If you look at the trend line in February 2023, you can see that another breakout is underway. This time probably won't be different, Greg said... Let's put it this way... The interest-rate market sniffed out the inflation picture better than my dog sniffs out a piece of bacon on the kitchen floor. As this chart shows, the consolidation-breakout pattern never ends well for stocks. Just like with other markets, if this turns out to be a "false breakout" in interest rates – which means instead of a big rally, it reverses lower – I'll take that into consideration and change my outlook for interest rates. This would likely line up with stocks breaking out as well. But until that happens, this is a chart I must respect and can't ignore. In short, don't ignore today's market action. It could be telling us more than you might think. So what should you do? Consider a few ideas... If you look at your portfolio and find you're "out over your skis" in part of it – especially with stocks – now might be a good time to trim some positions to keep your portfolio well diversified and properly allocated. And you may want to be wary of "jumping back in" to growth stocks or high "beta" names – at least if you have a short-term investing horizon. Put simply, the market doesn't look like it has put the "higher for longer" interest-rate story behind it yet... The fact that bond yields are rising again is strong evidence. And for more proof, shorter-term yields remain higher than longer-term yields... The "10-2" spread between 10-year and two-year U.S. Treasurys remains at negative 0.78% today. That's the lowest reading since 1981 (before a recession). If you believe another leg down for stocks is coming, cash or cash-like assets can still be your friend. A three-month U.S. Treasury bill offers a nearly 5% annual yield right now. However, that doesn't mean you should go "all out" with stocks... High-quality businesses that reward shareholders with dividends and buybacks are always worth owning as core portfolio holdings. These rewards will compound in the "bad" times and pay off in the "good" times. The bear tracks are back. And it's hard to tell how long they'll last. But if you're properly prepared for the long haul, do your research (or follow ours) and don't put too many eggs in one basket. That way, you'll sleep much easier at night. Robert Kiyosaki Talks Spy Balloons "I think we're going to war. There is something nefarious going on that we will never know, and it's a frightening time," said Robert Kiyosaki, the bestselling author of Rich Dad Poor Dad, regarding the recent spy balloon dust-up between the U.S. and China... [Click here]( to watch this video right now. For more free video content, [subscribe to our Stansberry Research YouTube channel](. And don't forget to follow us on [Facebook]( [Instagram]( [LinkedIn]( and [Twitter](. --------------------------------------------------------------- Recommended Links: [A New Financial Crisis Just Arrived]( Last week, while most investors panicked over the Federal Reserve's latest rate hike – and the big swing that followed – a new financial crisis had quietly taken hold of the U.S. stock market. And if you're following the usual crisis playbook... staying on the sidelines... or hoarding cash... your money is more at risk than at any other time in recent history. But there's a dead-simple way to take advantage of what's coming, instead of being blindsided. [Click here for the major story (including two stocks to SELL immediately)](. --------------------------------------------------------------- [A Financial Fraud BIGGER Than FTX and Madoff?]( The man who called the 2008 crash reveals a financial fraud that could be BIGGER than FTX and Madoff combined... and could soon impact millions of Americans. [Click here for the details](. --------------------------------------------------------------- New 52-week highs (as of 2/17/23): AutoZone (AZO), BorgWarner (BWA), CBOE Global Markets (CBOE), Comfort Systems USA (FIX), indie Semiconductor (INDI), Madison Square Garden Sports (MSGS), O'Reilly Automotive (ORLY), and Flutter Entertainment (PDYPY). In today's mailbag, feedback on [Dan Ferris' latest Friday Digest]( and some more notes about [the trouble with American railroads](. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Hi Dan, The dentist with the chainsaw here. Where can I buy CPI? Hehe! That was one of your best, a laugh around every corner. From Tinker Bell and fairy dust, fun house mirrors, and inflation drug heads saying 'all clear', to revisiting the dentist with the chainsaw, it was wonderful humor with a great message: 'Prepare for a hard landing!' We need to be light hearted like Monty Python in an Atlas Shrugged world or we could lose our sanity. "When you mentioned the Fed hitting the target, I thought of a hunting analogy (since besides dentistry and cutting up trees, I am also a hunter). The Fed (the hunter) can be proactive in choosing his stand near water, feed, and cover, and having the best scope and rifle, but when it comes down to hitting the whitetail deer (inflation and the economy), the hunter can only react to what the unpredictable deer does (i.e. stops behind a tree, runs by at full speed, or doesn't show up, etc.). Your message is clear 'We can prepare, we can't predict.' As far as I am concerned, the Fed's job on inflation and the economy is so bad, we might as well send the Fed out in the woods hunting with not a rifle, but a BB gun." – Paid-up subscriber Larry N. "Great writing. I will save this article forever. Yes, I am with you... if CPI was a stock, you buy once and your generation would reap the rewards." – Paid-up subscriber Ashok V. "How can you continue to confuse the issue with facts? Don't you realize someone with real power in D.C. might read this and conclude the fiscal lunacy of unlimited deficits cannot continue? That someone might conclude the return of economic sanity for this nation (and the world) is more important than their reelection or reappointment to their government position and gold-plated pension?" – Paid-up subscriber Robert B. "I really appreciate the wealth of knowledge available here at Stansberry, amazing. What a privilege to have this available; thank you very much!!" – Paid-up subscriber Douglas H. "When I was a kid in the '60s on the West Coast, I used to count the number of cars. The longest I ever counted was 105. I asked someone about it and was told there was a maximum limit of 100 FREIGHT cars, engines and cabooses did not count to the limit. So I was surprised to hear they were now doing 150+." – Paid-up subscriber William H. "Great report, I have not heard this side of the story." – Paid-up subscriber Art S. All the best, Corey McLaughlin Baltimore, Maryland February 21, 2023 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 929.8% Retirement Millionaire Doc ADP Automatic Data 10/09/08 814.6% Extreme Value Ferris MSFT Microsoft 02/10/12 798.9% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 597.4% Stansberry Innovations Report Wade WRB W.R. Berkley 03/16/12 593.9% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 579.5% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 446.5% Retirement Millionaire Doc AFG American Financial 10/12/12 443.1% Stansberry's Investment Advisory Porter FSMEX Fidelity Sel Med 09/03/08 312.9% Retirement Millionaire Doc ALS-T Altius Minerals 02/16/09 305.9% Extreme Value Ferris Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Extreme Value Ferris 1 Stansberry Innovations Report Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,361.4% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,249.7% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,064.7% Crypto Capital Wade MATIC/USD Polygon 02/25/21 1,022.2% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 561.0% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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