What is going on with the stock market now? I use technical analysis to analyze the markets and haven’t done a Youtube video since March. I give an overview of my views in this video update. I’m not looking for much of anything important to happen over the next few weeks or months. We’re seeing gold and silver turn up now as we got annualized CPI of 3% come in last week for the month of May. Don’t look for inflation to just collapse, it’s probably will stabilize around this level for the rest of the year. Current macro and market conditions are not likely to change much this summer.
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0:00:04.0 Michael Swanson: Hello, this is Mike Swanson. I run the website WallStreetWinner.com, and the odds are that you’re watching this video are perhaps simply hearing an audio podcast of it because you got an email from me telling you that it’s up. Now, I haven’t done a video or put one up on YouTube now. Since March, I’ve kind of taken a break from the markets. I’ll talk about that in a few minutes, but I know the odds are you want to hear about the markets first. So let’s take a look at what’s going on and why I’ve kind of taken a bit of a break from producing so much content that’ll be explained.
0:00:51.2 MS: Well, what I’m showing you right here is Google Trends. This is the number of times every day something is put into Google. It shows us how interest in something has changed over time. And this is the search term, AI. As you can see, interest in AI has completely exploded since the start of this year, and it’s reached a peak in April. So this is a brand new phenomenon, this is the meme of the year, and this is what is on the minds of people in the markets. Headlines everywhere are about AI. Just last week, I saw a headline or days ago saying that Elon Musk wants to create a new AI company. And this is the now the Silicon Valley venture capital startup world. Let’s create AI, AI, AI. Now, there are a few companies that are benefiting the most. Nvidia, number one. I really have no expertise in trying to tell you what’s the hot AI stock. I just say if you really wanna get on that, you just buy Nvidia and you get out of it when the stock market, bull market that we’re in, and I’ll talk about that in a moment, is over because I wanna show you what happened with the interest in Metaverse.
0:02:35.7 MS: Interest in Metaverse exploded two years ago as that became the meme of that year. You had to buy stocks focused on Metaverse. How many times did Cathie Wood get on CNBC Talk about Metaverse and people were into it. People were trying to chase the new Metaverse stock. And then that whole thing turned into a fad and it didn’t take off, it didn’t catch on. The Facebook company changed its name to Metaverse, but then had to pivot away from hyping that up just a couple months ago and then started to say, “We’re doing AI now. Metaverse, we’re kind of letting that go.” The goggles just didn’t take off. It was a concept for people to dream about and think about two years ago, we were told that we’re developing this in five, 10 years, this will take over the world basically, and it is fizzled out. And now we’re being told AI is the trend that’s gonna take over the world. I would suggest that there is reality to AI, but 90% of what we’re being told today is a lot of hype. It’s not going to, it is not like the invention of fire or the invention of the computer, and so forth.
0:03:56.7 MS: In fact, I compared Metaverse not to the invention of the movie theater or television, but to 3D glasses, a fad for movies that they tried to use in the 50’s and it didn’t work, and that was Metaverse. AI, to me, it is just hyped up, an improvement over the chatbot, but whatever the important thing isn’t whether you agree or disagree on that, it is simply to recognize and I think you do, that AI is the dominant thing on the minds of investors and the financial media is reflecting that, this is what people wanna hear about. Now, in comparison, look at bear market. People were worried about a bear market last year as the stock market fell and searching about that on Google. Now no one is doing it. The interest or worry over bear market has completely vanished.
0:04:58.7 MS: And the problem for someone like me who wants to create, let’s say a video or any sort of content about the financial markets, is if it’s not what most people want to hear about, the algorithms will not deliver it to them. So in 2021 in that summer, I was warning that, “Look, we’re headed for a bear market. It’s not starting today, but it’s coming because the internals of the stock market were starting to go down and decline.” And then that bear market became evident in 2022. I went to 50% cash though in the summer of 2021, preparing myself for that coming bear market. And then I took some tactical at times, short positioning in 2022, difficult to do, but I did it and I was able to beat the market, even have a gain that year while most people lost quite a bit of money. But as the calendar year shifted, my views of the market shifted actually in October, November, at one point last year I was almost 100% in cash in June, July, and then in October, I shifted back to getting back into the market, buying gold, buying silver, buying mining stocks, buying foreign markets. And then as the new year calendar shifted, I got back into the US market. And I actually recommended Nvidia because it was out before the stock market. I didn’t say Nvidia’s AI, I just point out, “Look, this stock is out before the market on a real strength basis.
0:06:45.4 MS: It’s gonna be a leader of this new bull market.” And that is exactly what has happened. The meme of AI is the story that’s justify the rally. But the technical action of the stock outperforming going in the S&P and the NASDAQ going into February told us something was up. But this is what I wrote on January 16th. Stock market rally confirmed by Ryan technical analysis. Buy signal, this buy signal was about the internals of the market making a vast improvement of the size that historically happens as new cyclical bull markets began and soon I was able to declare that Look… In February I repeated the meme new cyclical bull market and the thing about that, though, is most traders and investors, they either have a very short term time frame trying to do like options that expire in a week or a day focused on the daily or hourly gyrations. That’s what the Robinhood app shows the people.
0:08:03.9 MS: I try to line up my trades with daily charts as an entry point based on the longer-term trends, which I think are the most important. And that longer-term trend was bearish last year. That’s a year-long trend. And it shifted into a new cyclical bull market. Now cyclical bull markets last on average 2 to 5 years, I was saying In January and I still, in February, and I still believe this now that this is not going to be a bull market that goes up years on end, which is what so many people now telling you, “AI, AI, AI is changing everything, changing the whole world, changing the whole economy.”
0:08:48.4 MS: Is it changing the way you are buying stuff or your job? Probably not. Is it so far creating GDP growth? No, it’s not even doing anything contributing to the little bit of any decline in inflation. The rate of inflation we’ve seen. So we’re not going back to the way things were before 2020. I’ve been saying since January, I thought this was gonna be one of those cyclical bull markets, like the several in the 1970s. That lasted like two years or maybe three. That means it would probably come to an end next year, maybe around the presidential election. I can’t really look that far ahead. What’s important, though, is when I look at the market now. The internals of the market are remaining healthy. There’s no sign that this bull market is over. But if it’s a cyclical bull market as I’m saying, then the upside is limited for most stocks. So it’s not something like I would recommend someone to put all their money into right now. The time to have bought stocks was from the October to, let’s say, February timeframe and I… Is things developed. And we got past March. These banks blew up which is a sign this is not going back to the way things are before 2020. But the market rally matured and I frankly had lost any interest in telling people to keep buying. And to be a guru, to get the attention of algorithms, you have to be telling people, “Buy, buy, buy. Here’s a peek, here’s an idea. Do this.” If you stop doing that, the people lose interest in what you’re saying.
0:10:39.3 MS: So I lost an incentive to really at this point to make material videos, posts to get readers to get the attention of the algorithms ’cause they’re not gonna push it. This video is not gonna be pushed by the algorithms ’cause a lot of people that you just randomly see it, they’re gonna see the way I’m talking about things. And they’re not gonna hear the hype they wanna hear. And they’re gonna cut off the video. They probably did that minutes ago. The YouTube detects that and won’t show this video to very many people as a result. So I’m basically taking a vacation producing less content. And I’m not doing a lot of trades ’cause I entered my positions several months ago. And I’m not fully invested in this stock market because when we’re at a time now in which we can get over 5% in CDs and Treasury bonds.
0:11:48.4 MS: I now see them as a good investment, short-term bonds is what I’m speaking of because I do think the time will come again when there is a bear market, not today, maybe next year. But would I want to gauge every week how the market internals are doing in order to be able to see the end of the tunnel of the current bull market that they’re in, just as we were able to do in 2022. That’s the type of message no one wants to hear about. In 2022, no one was interested in bear market. I mean 2021, no one was interested in bear market until 2022. I’ve got the years mixed up. I was warning in 2021 of the internals, doing videos warning, doing blog posts warning, but no one cared until 2022. But this is what I’m gonna be doing going forward. Now I’m taking time out myself to work on other projects.
0:12:57.0 MS: I’m helping something locally going on that I’m doing a lot of time on. I wanna write a book that I’ve started working on it, more that I’ve had in the back burner for a long time. And also when it comes to what I’m doing, in the financial content I put out, I wanna reinvent how I’m organized, my website and basically what I’m doing because I think the nature of the internet is changing. I mentioned these algorithms several times, so many people getting their content from apps. The quality of content is rapidly deteriorating because it’s being driven by the algorithms and what people want, which is not necessarily what high quality or what’s the best information. That’s just the way things have evolved. So I’m not, I wanna develop at some point a whole new system of what I’m doing and I don’t really have that, planned out, but I got to reach out to you sometimes to update you on what I’m thinking and what’s going on. I’m just not gonna be doing it as frequently as I was before. So, one thing I’m gonna try though, with this video, I used to do an audio podcast and I abandoned it thinking video is, I’m just gonna focus on YouTube. Well, I’m not doing videos frequently enough to really make the YouTube algorithms wanna promote what I’m doing.
0:14:32.3 MS: And I don’t really want to just focus on YouTube, at this point ’cause I don’t wanna be catering to those algorithms. So, what I’m gonna try in this video is yes, it’s up on YouTube obviously, but I’m gonna make a transcript of what I’m saying. Put that on my website along with the video so people can have the option of just reading what I’m saying if that’s what they want. If you want to be able to get that sort of thing, get on my free email list if you’re not on it, there’s a link to do that with this. But I’m also gonna take an audio recording of this video and stick it out in the podcast world. I used to do a podcast and as I mentioned, I stopped doing it.
0:15:15.1 MS: I’m going to turn that back on and put an audio recording of this video up and see, if it gets any listens. If this format works, a video plus transcript, plus audio, then it may be something I’ll try again. So it’s a little bit of experiment I’m doing with this video update. So all that said, I don’t expect anything big to be happening in the markets. That’s one reason, this week, I don’t think much is happening. It’s, or this summer, frankly. And that’s one reason, I’m not doing as much frequent content. Now, one thing that has happened last week, gold silver mining stocks turned up as that CPI report came out last week that showed annualized inflation was about 3%, lower than we were June of last year. And the Fed Fund futures is now pricing in basically 90% certainty of a rate hike at the coming meeting at the end of this month.
0:16:17.7 MS: But after that, the odds are no more hikes. This should be finally the end of the rate hike and cycle. And that’s, brought the correction that we’ve been seeing in gold. Looks like it ended and they turned up last week. Gold, silver, mining stocks that is, but so did, material stocks, foreign markets are doing great. Europe is outperforming the US, Germany is outperforming the US in particular. It’s been doing that since October and most, a lot of the EWG ETF, which tracks Germany made new two-week high last week. So I believe the key for investing is diversifying in global markets in gold, silver, not just being obsessed with Nvidia or the NASDAQ. Funny thing is to show you how the algorithms program everybody and the media programs, everybody. I said that on a interview I did on Jim Goddard’s show that he does for House Street. Posted that on my website and someone heard it, they emailed me and said, I think you’re wrong about gold because it’s not gonna go up as fast as the NASDAQ. Well that’s not the, maybe not, for the next couple of weeks, I don’t know. But that’s not just the point of owning something besides the NASDAQ, it’s not that I want something that’s gonna go up as fast as the Nvidia. It’s to be diversified. You got to control your risk. 0:17:46.6 MS: The same people that went all in on NASDAQ and ARKK and these Metaverse things in 2021, most of them failed to adapt and get out when the warning sign of the internals were there and then they got crushed. They’re gonna make the same mistake all over again. I don’t want you to make that mistake, but people don’t want to hear about that. They want to get rich quick. They want, they have the mentality of want to be in what’s going up the fastest. Not diversifying, not controlling risk, which is what it takes to be a long-term winner in the market, defined by someone who’s beating the performance of the SP 500. Only a few people are able to accomplish that over a 10-year span. And that should be your goal to accomplish that. Not to get rich quick, this isn’t a lottery game or a slot machine. So those are my thoughts today and, if you wanna see the next video put up, hit the subscribe button. You wanna encourage me to do more of them, hit the like button and I’ll be talking with you later.