A Rare Bullish Sign

Friday’s market action wasn’t just a sigh of relief – it actually kicked off a somewhat rare market indicator that suggests the meltup has begun.

Some context? We’ve been critial of the stock market for its high concentration – with Nvidia and Microsoft alone making up over 15% of the weighting in the widely-followed S&P 500.

It doesn’t take a big move from either of those companies to weigh on the index. Market breadth – the percentage of total companies moving up or down – is another factor.

So what happened Friday? A rare “90/90 day.”

That’s when 90% of stocks advanced at the same time – a massive level of market breadth. And when 90% of stocks also rose on heavy volume, suggesting a fundamental shift, not a one-time reaction to news:

Turn Your Images On

Friday’s 90/90 day shows tremendous volume and breadth in a market that has sometimes lacked it. (Source: Carson)

When these 90/90 days occur, the market is up – believe it or not 90% of the time a year later. And on average, it’s up by more than average – 23%.

“This is one of those charts that seems out of odds when they occur,” notes our Portfolio Director Andrew Packer. “90/90 days triggered often in the first few years after the Great Financial Crisis, and sure enough, stocks rose higher, even if they seemed overvalued or the economy seemed too sluggish at the time to justify the trend.”

If that’s the case this time around, the seasonal market dip this year may give way to what Grey Swan Fraternity member Mark Jeftovic has been calling a “terrifying bull market” – where stocks rally not because of fundamentals, but because investors perceive it as the place to be to avoid inflation.

~ Addison

P.S. Stocks weren’t the only assets that popped higher on Friday as Federal Reserve Chairman Jerome Powell hinted that rate cuts were coming, inflation or not.

Gold popped higher on the news. Makes sense in our “terrifying bull market” thesis.

And bitcoin jumped higher, although it sold off over the weekend as large players decided to take some profits off the table. Both are excellent long-term inflation-protecting assets, and gold in particular is well off of where it should trade based on our calculations.

If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com.

Friday’s market action wasn’t just a sigh of relief – it actually kicked off a somewhat rare market indicator that suggests the meltup has begun.

Some context? We’ve been critial of the stock market for its high concentration – with Nvidia and Microsoft alone making up over 15% of the weighting in the widely-followed S&P 500.

It doesn’t take a big move from either of those companies to weigh on the index. Market breadth – the percentage of total companies moving up or down – is another factor.

So what happened Friday? A rare “90/90 day.”

Turn Your Images On

Friday’s 90/90 day shows tremendous volume and breadth in a market that has sometimes lacked it. (Source: Carson)

When these 90/90 days occur, the market is up – believe it or not 90% of the time a year later. And on average, it’s up by more than average – 23%.

~ Addison

P.S. Stocks weren’t the only assets that popped higher on Friday as Federal Reserve Chairman Jerome Powell hinted that rate cuts were coming, inflation or not.

Gold popped higher on the news. Makes sense in our “terrifying bull market” thesis.

If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com.

Fresh GDP data — the Commerce Department revised Q2 growth upward to 3.3% — fueling the rally. Investors cheered the “Goldilocks” read: strong enough to keep the music going, not hot enough (at least on paper) to derail hopes for a Fed pivot.

Even the oddball tickers joined in. Perhaps as fittingly as Lego, Build-A-Bear Workshop popped after beating earnings forecasts, on track for its fifth consecutive record year, thanks to digital expansion.

Neither represents a bellwether of industrial might — but in this market, even teddy bears roar.

In modern finance theory, only U.S. T-bills are considered risk-free assets.

Central banks are telling us they believe the real risk-free asset is gold.

Our Grey Swan research shows exactly how the dynamic between government finance and gold is playing out in real time.

When we compare apples to apples—median home prices to median household income, both annualized—we get a much more nuanced picture. Housing has indeed become less affordable, with the price-to-income ratio climbing from roughly 3.5 in 1984 to about 5.3 today. In other words, the typical American family now has to work much harder to afford the same home.

But notice something crucial: the steepest increases coincide precisely with periods of massive government intervention. The post-dot-com bubble recovery fueled by Fed easy money after 2001. The housing bubble inflated by government-backed mortgages and Fannie Mae shenanigans. The recent explosion driven by unprecedented monetary stimulus and COVID lockdown policies.

It’s hardly a secret that the national debt has surpassed $37 trillion.

This morning, the Peter G. Peterson Foundation, released a survey showing 79% of Americans say they are deeply concerned about the fiscal outlook, across party lines. The Fiscal Confidence Index sits at 49 — well below neutral.