Casey Report readers know this is part of our “script”…..
The S&P 500 plunged into its first correction since 2011 on August 23. A correction is when an index falls 10% or more from its last high. In total, the S&P 500 plunged 11% in 6 days. In the latest issue of The Casey Report, E.B. Tucker told his readers that this big drop marked the end of the 6 year bull market in U.S. stocks. He wrote: We believe the era of asset prices soaring on a wave of easy credit is over. Last month’s major stock market decline is the start of a very tough time for stocks and the economy.
The crash last month pushed U.S. stocks below an important long-term trend line…..
E.B. explains why this is such a big deal: A long term trend line shows the general direction the market is heading. Many professional traders use it to separate normal market gyrations from something bigger. Think of it as a “line in the sand.” As you can see from the chart below, there have been a few “normal” selloffs since 2011. On Friday, August 21, however, the S&P dropped below its long term trend line for the first time in about four years.
U.S. stocks rebounded after last month’s crash…..
But E.B. told his readers the rebound was only temporary. He said the market was in the middle of a “dead cat bounce.” E.B. thinks U.S stocks will keep falling, in part because they’re so expensive.
Right now, the S&P’s CAPE ratio is 24.6, about 48% more expensive than its average since 1881.
The S&P has only been more expensive a handful of times since 1881. That includes the years around the 1929, 2000, and 2007 market peaks.
The chart below shows that the market eventually collapsed after the high CAPE periods around the 1929, 2000 and 2007 market peaks:
The Fed’s easy money policies have fueled a reckless debt binge...
And debt acts like dynamite when a financial crisis hits. We’re in a very fragile situation. E.B. thinks last month’s brutal selloff in U.S. stocks was just the beginning. Things are likely to get much worse from here. But they don’t have to get worse for you. E.B. can be your “personal guide” as this 6-year bull market continues to unravel. He’s recently shown readers how to profit from crashing oil prices and the digital revolution in money. You can read all about E.B.’s favorite investing opportunities every month in The Casey Report.
Right now we’ll send you a FREE 30-day subscription to The Casey Report when you order Going Global 2015…one of the most important books we’ve ever published. Going Global shows you how to move your wealth outside the “blast radius” of any financial crisis.
We usually sell Going Global for $99. But we’re virtually giving away a very limited number of hard copies. All we ask is that you pay $4.95 to cover our processing costs.
Why are we practically giving away so much of our best research? Because we hope that after trying what is essentially a free sample of some of our best and most valuable work, you’ll want to do business with us again.
Click here to claim your hardcover copy of Going Global 2015 and your FREE 30 day subscription to The Casey Report.
Get our latest FREE eBook "Understanding Options"....Just Click Here!