These Bearish Indicators Signal a 12% Drop

By Nick Rokke, analyst, The Palm Beach Daily


Today’s Daily is for the traders.

As I’ll show you in a moment, I see a short-term setup that signals an impending 12% drop in the market.

We’re going to get a little more technical than normal. If you’re a trader—or interested in learning more about trading—understanding this setup will help you become more profitable.

The bearish signals I’m referring to happened on Tuesday. And it was confirmed the following day.

It is a very reliable indicator that I’ve used before to profit on short-term trades.

Let me explain…

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The Ominous Chart

Today, we’re going to look at the NASDAQ 100 Index. This index tracks 100 of the largest tech companies in the world.

These companies have been the market leaders. We’re talking about the FAANG stocks—Facebook, Amazon, Apple, Netflix, and Google.

The general market follows what these companies do.

And right now, this chart is looking very risky. We have two bearish signals that, combined, set up a very high-probability trade.

The Double Top

The first signal I want to show you is the double top. As you can see in the chart below, the NASDAQ 100 recently showed a double top around the 7,000 level.

Technicians consider double tops to be a reliable reversal signal. What this means is that, on two separate occasions, the buyers tried to push the market higher… and failed.

In other words, it signals that the bears have taken control of the market.

And it’s even more ominous when this happens at a round number. Markets are often attracted to big, round numbers. It’s a psychological thing.

But it’s become a kind of self-fulfilling prophecy. Since traders thinkthese round numbers can be resistance levels, they become resistance levels.

To see the NASDAQ 100 fail to climb over 7,000 multiple times is worrying.

And that’s not the only bearish signal…

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The Bearish Engulfing

Now we’re about to get a little more technical.

I’m going to show you a candlestick chart of the PowerShares QQQ ETF (QQQ) which tracks the NASDAQ 100 index.

Keep in mind, candlestick charts are more complicated… But many technicians use these charts because you can get a lot more information about the market, including unique signals.

Here’s the chart—I’ll explain it a little more below.

As you can see, there are a lot of bars on here that look like candlesticks. Each stick represents one day’s activity.

The green candlesticks show a day when the stock market went up. Red candlesticks show a down day.

You can still see the double top on this chart. But what you can’t see on the line chart above is the “bearish engulfing” pattern.

A bearish engulfing pattern happens after an uptrend like the one we saw from February 9–February 26. And it shows the market reversing hard.

Look at the two bars in the circle. You’ll see a green one and a red one. The engulfing happens when the red bar is higher and lower than the green bar. It “engulfs” the green bar.

This shows the market opened higher than the previous day. But the buying power dried up and bears took control during the day. And those bears drove prices sharply lower.

And to make matters worse, the following day, the market “confirmed” the engulfing by heading even lower.

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Here’s what you need to understand: As long as QQQ stays below $172, the market is in danger of falling lower.

I think we will retest the lows from early February. That’s a 12% drop.

So if you’re a trader, you might want to consider adding some short exposure. Or taking profits on your longs right now.

And if you’re an investor, review your investing plan. But remember, this is a short-term play. There’s no need to panic. I’m still bullish on the market. And I believe it will finish this year much higher.

The World’s Smartest Investors Are Following Our Advice

By Nick Rokke, analyst, The Palm Beach Daily


On September 28, we told you the retail apocalypse was over.

We said that there’s no way all brick-and-mortar retailers were going bankrupt. And that the selling was overdone.

Less than a week later, some of the world’s richest investors started following our advice.

How do we know that?

Well, hedge funds just had to unveil their holdings. At the end of every quarter, all hedge funds with over $100 million in assets need to file what’s called a 13F report with the Securities and Exchange Commission (SEC). And the SEC makes these reports public each quarter.

I always make sure to pay close attention when these reports come out. They tell you what the world’s most successful investors are actually doing with their money. And we’ve taken full advantage of this strategy here at the Daily

Last March, we saw that hedge funds were moving money into financials.

Anyone who followed them into financials and bought the Financial Select Sector SPDR ETF (XLF) is up over 20% right now.

And again, in August, we found out one of our favorite big-money managers, David Tepper, was moving into tech stocks—specifically, Google, Alibaba, and Facebook. Those stocks are up an average of 15% in just six months.

Following these reports can make us a lot of money. And right now, the big money is flowing into retail…

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The Big Money Is Moving Into Retail

Over the past quarter, more money went into the consumer discretionary sector than any other sector. The consumer discretionary sector holds companies that sell things people want, but don’t need—things like electronics, vacations, and jewelry.

Some companies in the sector are major retailers Amazon, Home Depot, and Nike.

In total, these funds allocated an extra 0.3% into these kinds of companies. Now, 0.3% doesn’t sound like much, but these funds control over $2.7 trillion. So 0.3% means over $8 billion shifted into the sector.

That’s huge.

And it’s why it was among the best-performing sectors at the end of 2017. As you can see in the chart below, from October 1 to December 31, consumer discretionary stocks rose 11%… almost double the S&P 500’s 6% return during the same period.

But these guys aren’t moving around large sums of money for just an 11% gain. They’re looking for more…

Announcement: “I’m Giving My Money Away”

In the weird video clip, you’ll see here, ex-hedge fund manager James Altucher is seen literally giving his money away

… about $1,000 cash total… to perfect strangers on the streets of New York City.

And he makes every one of them an incredible proposition… one I GUARANTEE you’ve never heard before. Click to see.

Who’s Buying What

Legendary investor David Einhorn (who’s earned 16% annual returns over the past 30 years) just bought a bunch of retailers. This includes JCPenney, Nordstrom, and Kohl’s.

Bill Ackman, a similar investor to David Einhorn, bought Nike.

Billionaire investor Julian Robertson, the “Wizard of Wall Street,” likes pizza stocks. He bought Papa John’s and Domino’s Pizza. Both of those fit within the sector.

And billionaire investor George Soros bought Overstock.com and Target.

Like we said, the “retail apocalypse” was getting overblown. We knew that not all brick-and-mortar retailers would go out of business. Over 90% of retail purchases are still made in stores.

It was only a matter of time until the market realized this. Not only was the selling in retailers overdone, the economy is strong.

We’ve been pounding the table over the past year about how strong the economy is. We saw this firsthand in our road trip through the Midwest. Unemployment is down, incomes are up, and consumers are feeling confident.

All that is going to lead to more spending. According to a survey done by ChangeWave Alliance, 29% of consumers are planning to spend more this upcoming quarter than they did last year. This shows that people are feeling good about the economy.

Big-money investors agree with us. That’s why they’re buying retailers and other consumer discretionary stocks hand over fist.

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In less than 3 months, the biggest reboot to the U.S. dollar in 100 years could sweep America.

It has to do with a quiet potential government agreement you’ve never heard about.

Click here now for the details

How to Take Advantage

It’s not too late to get into these companies. The one-click way to ride this trend higher is to buy the Consumer Discretionary Select Sector SPDR ETF (XLY).

If you want to buy a few individual companies, you can look into the Elite 25 portfolio for some quality consumer discretionary stocks that are trading cheaply.

They include:

  • American Outdoor Brands (AOBC)
  • AutoZone (AZO)
  • Brinker International (EAT)
  • Brunswick Corp (BC)
  • Foot Locker (FL)
  • L Brands (LB)
  • Michael Kors (KORS)
  • Nautilus (NLS)
  • Ruth’s Hospitality (RUTH)

These nine stocks should perform well over the next few years.