Why the Platinum Peak Could Be Behind Us

By Dr. Steve Sjuggerud

If you want a near-guaranteed way to generate poor returns, this is it…

I’ve spent more than 20 years investing. And I’ve found that betting with the crowd almost never wins. In fact, I’ve spent my career trying to do the exact opposite. That’s how you really make money.

Longtime readers know that mom-and-pop investors tend to buy at the worst possible moments. They sit on the sidelines through most of the rally and then pile in at the end… once the rest of the crowd has done the same.

This happens all over markets, from stocks to real estate to commodities. And we’re seeing this setup play out right now in the precious metals market, too.

Platinum rallied more than 25% from its bottom in August 2018 to its peak in September this year. Now, the crowd is piling into the trade. And according to history, that means the top could be in.

Let me explain…

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Wild levels of investor sentiment can give us incredibly valuable information. They tell us when an investment is too loved or too hated… and that, in turn, tells you to buy or sell.

One fantastic source of sentiment data is the Commitment of Traders (“COT”) report. It’s a weekly report that tells us what futures traders are doing with their money.

This kind of real-money indicator is as good as it gets in the sentiment world. And it’s a great contrarian tool when it hits extreme levels.

The simple truth is that when futures traders all bet in one direction, the opposite is likely to occur. And that’s exactly what we are seeing in platinum today.

After a strong rally in 2019, bets on higher platinum prices hit a multiyear high. In fact, we’ve only seen levels this high three other times over the last decade. Take a look…

Futures traders are all betting on higher platinum prices once again. And those bullish bets recently hit their highest level in roughly three years.

We’ve only seen sentiment get this bullish three other times over the past decade. Similar cases happened in 2013, 2014, and 2016.

Each time, platinum prices dropped over the next year. And the overall losses were substantial. Take a look…

Futures traders went all-in on platinum prices at the worst times back then. And they lost double digits over the next year in each case.

Platinum has already pulled back since peaking in September. But with bullish bets at multiyear highs, prices could fall much further.

Don’t make the mistake of getting caught up in the crowd. Futures traders are wildly bullish. And that means the top could already be in for this precious metal.

Here’s Why Stocks Will Continue to Hit All-Time Highs

By C. Scott Garliss, editor, Stansberry NewsWire

Stocks continue to hit new highs. And the market’s current record run is coming from an unexpected source… corporate earnings.

Heading into the current reporting season, analysts were pessimistic. For the third quarter, they expected the earnings of S&P 500 Index member companies to fall 4.6%.

Only a few months earlier, those same analysts were anticipating a 0.6% decline. So clearly, they expected that the negative headlines would be baked into company results.

That turned out to be a blessing, though.

All that pessimism has made it easy for companies to beat estimates. Companies have beaten earnings expectations at a huge pace this quarter.

That’s helped propel stocks higher. Plus, there’s another reason we could see this rally continue in the coming weeks.

Let me explain…

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Through the end of last week, 92% of the S&P 500’s companies have released earnings. A huge 75% of those companies reported an earnings-per-share beat, versus the five-year average of 72%. Earnings have tended to be 3.9% better than expected.

Sales have also been better than expected, too. So far this season, 60% of companies have reported better-than-expected sales. And those sales have been 0.8% above expectations. The blended revenue growth rate has been 3.1%, picking up steam from 2.8% a couple of weeks ago.

The results caught the market by surprise. But they shouldn’t have. During this bull run, analysts have tended to underestimate earnings.

And it looks like Wall Street is setting itself up for a repeat in the fourth quarter.

In October, analysts began lowering their next earnings estimates even further, dropping them by 2.8%. That’s below the five-year average decline of 1.7% during the first month of the quarter. Since this summer, analyst expectations for the fourth quarter have dropped from growth of 5.6% to a decline of 1.4%.

Once again, Wall Street’s expectations could be overly conservative. It’s also worth noting that analysts are anticipating a rebound in earnings growth starting in early 2020. This all bodes well for stock prices going forward. But it’s not the only catalyst out there…

Even as the catalyst of earnings beats is removed from the market, another one will replace it: buybacks.

Companies are prohibited from repurchasing their shares in the weeks leading up to their earnings releases. So the end of the reporting season means they can resume buying back shares.

Take a look at the chart below. It measures the performance of the top 100 stocks with the highest buyback ratio in the S&P 500 Index.

Clearly, owning companies that buy back their own shares is a good thing. And it’s positive for the overall market, too.

Consumer-electronics giant Apple (AAPL) is the single largest corporate share repurchaser. It’s already announced fourth-quarter earnings, so the company is likely back in the market buying shares. And even though Apple is the biggest repurchaser, it’s far from alone.

Based on the activity in the first half of this year, S&P 500 companies will likely buy back as much as $1 trillion worth of stock in 2019. Not only would this break last year’s record of $806.4 billion, it would also provide support for the stock market heading into year’s end.

In short, negative sentiment is a big reason why stocks have been hitting all-time highs. Most companies have found it easy to beat Wall Street’s low expectations. Now, that negativity is setting the market up for a solid fourth quarter… And companies getting back out there to buy shares is another positive.

When you combine the two, it’s easy to see why stocks have been hitting – and should continue to hit – all-time highs. And it’s why you want to stay long right now.