Two Keys to the Last Great 'Melt Up'... And What's Happening Right Now
Editor's note: Our colleague Steve Sjuggerud keeps pounding the table...
And for good reason.
It's clear the "Melt Up" is in full swing... U.S. stocks shook off recent fears about the deadly coronavirus, rallying yet again to all-time highs. The S&P 500 Index is up roughly 17% since early October. And the tech-heavy Nasdaq Composite Index is up around 25% in that span.
For now, the longest bull market ever marches on. But where will it go from here?
This weekend's Masters Series is adapted from a brand-new research report that Steve just published for his True Wealth Systems subscribers. In today's essay, he covers what investors can expect as we enter the final stages of this Melt Up... explains why you're not too late to the party... and details how this is similar to what happened in the late 1990s...
Two Keys to the Last Great 'Melt Up'... And What's Happening Right Now
The moment is here...
We're entering the final stages of one of the greatest bull markets of all time.
This is exciting news. It could be hugely profitable for you if you take the right steps now.
You see, the biggest gains in stocks often happen during the last few months of a bull market... what I call the "Melt Up." It's the strong rise in the market right before the bear market "Melt Down."
The final stages of this bull market are now underway, as I'll explain in this weekend's Masters Series. And that means it's time to do whatever you can to maximize your profits from this rare event.
Now, I know what you're probably thinking... "Steve, stocks have gone up for nearly a decade. It's the longest bull market in history. Aren't the big gains behind us?"
You might think that you missed out... But that's not the case.
The biggest gains of a bull market happen during the final phase. They happen during the Melt Up. And the Melt Up is here now.
That means the biggest gains are still to come.
In short, you want to own U.S. stocks now. And making several specific investments right now can help you earn the largest profits possible during the Melt Up.
Of course, after the Melt Up comes the Melt Down. We have that covered as well...
In tomorrow's Masters Series essay, I will share all the details about one indicator that we'll use to track the health of the bull market. We also track a handful of others. These indicators give us "Mr. Market's" vital signs. And they'll warn us when the end is near.
But as you'll see, we're not there yet. The Melt Up still has plenty of room left to run. And that's why it's so important to start building your Melt Up portfolio right now.
Let's get started today by looking at why the Melt Up is so powerful... And why now is the time to act.
The Biggest Gains Happen During the Melt Up
The Melt Up is a powerful idea... But few investors truly understand it.
It's based on a simple premise: Stocks often have their biggest, most explosive gains at the end of major bull markets.
In short, before the big Melt Down arrives, we have a big Melt Up.
It's the final push higher before the bear market kicks in.
The most recent major example of this happened at the end of the 1990s bull market. The Nasdaq Composite Index nearly doubled in 1999 alone. Now that was a Melt Up.
Importantly, the Melt Up typically begins after a time of extreme fear.
In late 1998, stocks had fallen dramatically in the wake of the Asian crisis – when several Asian currencies crashed – and we hit a fear extreme. Then, stocks surprised everyone and soared higher... The Nasdaq rose 200% in 18 months during the dot-com bubble.
I can't guarantee a massive move like that again, of course. But I do believe that the coming years could resemble the late 1990s.
We appear to be in the very late innings of a great bull market... And as history shows, the fastest gains come in the final innings.
Why am I so confident?
To put it simply... stocks have recently done the same things that they did back in the 1990s.
Stocks fell dramatically when we were several years into that bull market... And then they soared dramatically to new all-time highs.
That happened again in late 2018. Let's take a closer look at those setup conditions...
Stocks Hit a Fear Extreme... Then Soar to All-Time Highs
There are two keys to what happened in the last great Melt Up, and what's happening now.
The first is a fall in the market accompanied by extreme fear. The second is a boom in stocks, hitting new all-time highs after folks had given up.
The extreme fear began in late 2018. Stocks quickly fell double digits.
You can see the major decline by looking at this chart of the S&P 500 Index...
This was a painful move. It was swift and deep.
Not only did stocks fall 10%-plus... They did it in a few weeks. And investors were spooked.
Folks had gotten used to consistent gains and easy money over the previous couple of years. But stocks showed a crack in their armor, and that caused a major spike in fear.
Defining fear is more challenging than you think – after all, how do you put a number on a human emotion?
We look at it in a variety of different ways, but the most common way to size up fear in the markets is through the Chicago Board Options Exchange Volatility Index ("VIX") – often referred to as the market's "fear gauge."
When stock prices move wildly, the VIX goes up. When stock prices aren't volatile, the VIX moves down.
The VIX was actually near multidecade lows before the late 2018 correction. Then it spiked in dramatic fashion.
Generally, a VIX reading of more than 20 shows fear in the market. And during the late-2018 fall, the VIX rose above 40 – one of the highest levels we've seen in recent years. Take a look...
This is exactly what we're looking for. It's exactly what happened before stocks melted up in the late 1990s.
Investors got scared... Stock prices fell, but then recovered. They reached new all-time highs after that, and then continued to soar during the final stage of the bull market – the Melt Up.
This is all happening now. Stocks have soared since the 2018 fall – just like at the end of the 1990s bull market.
They've also hit new all-time highs in recent months. That alone is big news. It helps confirm that the Melt Up is here. But there's another reason I'm sure the final stage of the Melt Up is underway.
In tomorrow's Masters Series essay, I'll detail a major change that has happened recently in this bull market. And I'll share why this development confirms our opportunity in the coming months.
Good investing,
Steve Sjuggerud
Editor's note: Steve has pounded the table about the Melt Up for years. And during a special event earlier this week, he revealed all the details about what to expect in 2020...
In short, Steve believes this could be your LAST chance to jump in and ride the greatest bull market in history to the very top. So you don't want to get caught sitting on the sidelines.
To make sure as many folks as possible can hear Steve's powerful message, we've put together a limited-time replay of the event. And as you'll see, Steve is so confident about his Melt Up research that he's offering an incredible guarantee. Watch the replay right here.