A Warning Sign Amid the Bullish Signals

The worst is likely behind us for stocks. But we shouldn't be blind to risks along the way... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] A Warning Sign Amid the Bullish Signals By Brett Eversole --------------------------------------------------------------- The worst is likely behind us for stocks. And there are plenty of reasons to be bullish. I've highlighted them in DailyWealth in recent months. But nothing guarantees a straight shot up from here. The market can still surprise us to the downside. So we need to be prudent as investors. That means watching how prices are moving... and keeping an eye on the underlying health of the market. Unfortunately, its health has taken a step backward in recent weeks. We just got a warning sign. And it's a reason to at least be cautious from here. Let me explain... --------------------------------------------------------------- Recommended Links: [Why the 'Perfect Storm' in Gold Today Could Make You 10 Times Your Money]( Gold has been surging in recent weeks amid growing recession concerns and the fast-approaching deadline before the U.S. defaults on its debt. But according to 50-year gold expert John Doody, whose work is read by gold-mining executives and more than 40 professional money managers all around the world, most folks are completely missing how to play this situation for maximum wealth protection... and profit potential. [Click here to watch now](. --------------------------------------------------------------- [Where to Make Money in 2023]( The global banking system has been rocked in recent weeks... the Federal Reserve just raised rates to 16-year highs... and the U.S. Treasury could run out of money in days. But there's a little-known secret to making money during record volatility, which some Wall Street firms used to TRIPLE their profits last year. [Click here to learn more](. --------------------------------------------------------------- Doctors don't always check on a patient just by looking them over. They often need to do some detective work if they suspect a deeper problem. That might mean ordering a blood test or an X-ray... and taking a look beneath the surface to see if a patient is healthy or not. It's important to do the same in financial markets. Stock prices alone can tell you a lot about the health of the market. If they're going up, things are probably good... But underlying problems are always possible. So it's often worth digging a little deeper to see what's really going on. One way to do that is to look at how many stocks are moving higher. In a healthy market, you want to see lots of stocks rallying. That means everyone is doing well – not just a handful of the largest companies. This idea is known as market breadth. And a simple way to track it is through the advance/decline line... This indicator comes from adding up how many stocks were up on a given day and subtracting how many were down. You'd also add that number to yesterday's total... And then you'd do the same thing the next day. So it's a cumulative measure. The advance/decline line usually rises and falls with the overall market. Here's what it has done in recent years... The advance/decline line rose consistently during 2020 and 2021 as stocks moved higher. Then it fell with the market in 2022. It has also recovered alongside the stock market in recent months. But if stocks hit a new high and this measure fails to do the same, that's bearish divergence. And it's a warning that prices could soon drop. This move is one sign of weakness in the market. And it just happened recently. Take a look... Both the S&P 500 Index and the advance/decline line hit multimonth highs in early February. The market broke above those levels recently. But the advance/decline line has moved much lower since. Fewer stocks are moving higher. And that's a sign that our "patient" is less healthy than we'd like to see. Keep in mind, though... this divergence doesn't guarantee a dramatic fall in prices. The indicator's move lower means the market isn't as healthy as we'd prefer in the near term. And we likely won't see a major rally until that improves. It's more of a reason to expect a slowdown than an outright crash. We have plenty of reasons to be bullish today. But we shouldn't be blind to risks along the way. Stocks just flashed a warning sign. And that means the rally is likely due for a pause. Good investing, Brett Eversole Further Reading "Corporate investment is one of the most important signs of a healthy economy," Joel Litman writes. That's a problem – because this measure has been declining. Companies aren't investing in growth. And that's one reason to stay cautious and selective right now... [Read more here](. "Simply put, you don't need to be 'all out' or 'all in,'" Corey McLaughlin says. Everyone's fixated on whether we'll get a "hard landing" or a "soft landing." But in this market, it's more important to find opportunities that arise – and avoid the duds... [Learn more here](. Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK Microsoft (MSFT)... tech giant Nvidia (NVDA)... graphics processing units Taiwan Semiconductor Manufacturing (TSM)... semiconductors Advanced Micro Devices (AMD)... semiconductors Broadcom (AVGO)... semiconductors Oracle (ORCL)... database and cloud services Meta Platforms (META)... social media Palo Alto Networks (PANW)... cybersecurity Honda Motor (HMC)... automaker e.l.f. Beauty (ELF)... makeup and skin care NEW LOWS OF NOTE LAST WEEK Amgen (AMGN)... pharmaceuticals Bristol-Myers Squibb (BMY)... pharmaceuticals L3Harris Technologies (LHX)... "offense" contractor 3M (MMM)... manufacturing SBA Communications (SBAC)... cellphone towers PayPal (PYPL)... mobile payments V.F. Corporation (VFC)... apparel maker Macy's (M)... "death of malls" Keurig Dr Pepper (KDP)... soft drinks British American Tobacco (BTI)... tobacco Nutrien (NTR)... fertilizer Dominion Energy (D)... utilities --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. 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