Believe It or Not, the 'Melt Up' Is Here

'Mom and Pop' are back... Believe it or not, the 'Melt Up' is here... What you need to remember about coronavirus fears... Your last chance to save big on Steve's best Melt Up research...

For the past five years, our colleague Steve Sjuggerud has repeated one bold prediction again and again...

In short, Steve said this long bull market would end with a "Melt Up"... an explosive final rally that saw individual investors go "all in" on stocks again. Here's how he put it in the July 19, 2018 edition of our free DailyWealth e-letter...

I've been in the markets full time for 25 years. I have covered stock markets from all over the world, and all kinds of assets. Bonds, currencies, commodities, property, collectibles... you name it, I've been through it.

I've seen a lot of major peaks in asset prices... And they all feel the same. Investors clamor for more and more. They throw caution to the wind, buying as much as they can with no worries.

As Steve reminded DailyWealth readers, we've seen this exact scenario play out several times in recent years...

We saw it with bitcoin in December [2017]. Everyone I knew was asking me if they should buy. And every other news headline described a new batch of "bitcoin millionaires." Investor excitement was so thick you could cut it with a knife.

The same was true for real estate a dozen years ago. Folks were giving up their day jobs to flip houses. The money was easy. And almost everyone had a false sense of security that housing was a "sure thing."

The dot-com peak in 2000 was similar too. I had friends who started day trading and turned into millionaires. Businesses with no real plan to ever make money were going public... and soaring hundreds of percent in their first days of trading. It was crazy.

Those moments are what tops feel like. You can feel the electricity in the air when everyone thinks they'll be the next one to get rich quick.

Now, longtime Digest readers know no one has 'called' this bull market better than Steve...

And anyone who has followed his advice has had the opportunity to make an absolute fortune over the past 10 years. But there has been one problem...

There has been no sign of a true stock market Melt Up.

Despite the big gains in U.S. stocks to date, most investors have remained stubbornly pessimistic. In fact, as recently as a few months ago, we saw little indication that investors would ever become bullish on stocks again.

But suddenly, this appears to be changing...

As Steve just explained to DailyWealth readers on Friday morning, the last piece of the Melt Up "puzzle" is now falling into place...

Today, we're entering a similar time of euphoria. I know it because of what we've just seen in the markets. Despite rampant fears, stocks quickly jumped back to new highs after a minor – but seemingly painful – fall.

My mother-in-law is interested in stocks again, too. Just last week she told me about her position in Apple (AAPL), and how well it did last year.

This is it, my friend. The Melt Up is here.

I have been waiting for this moment. This is the stage where the big gains finally start to kick in. It has taken entirely too long to get here, in my opinion. But it's here now.

This isn't just conjecture...

The latest data from discount brokerage firms confirm what Steve is seeing... Individual investors are finally getting back into stocks in a big way. As news service Bloomberg reported on Friday...

[Individual investors'] fingerprints are on Apple's staggering rally. They piled into Tesla as it tripled, and turned speculative fliers like Virgin Galactic into some of the most heavily traded shares in the country...

While it's tough to know what's causing what – bull markets are fueled by new converts but also lure them – trading volume at online and discount brokers has exploded...

Individual investors were seen as indifferent participants for much of the 11-year bull market. No more. The latest leg of their emergence times closely with October, when E-Trade, Charles Schwab, and TD Ameritrade slashed commission fees to zero. Not that it's firm proof of anything, but since the start of that month, the S&P 500 is up 12% and the Nasdaq 100 has surged 22%.

That's the good news...

It's a strong sign that Steve will be proven right yet again... and that stocks could absolutely soar in the months ahead.

But we'll also remind you that the Melt Up will not be a one-way move higher...

As Steve has noted many times, the tech-heavy Nasdaq Composite Index experienced no less than five double-digit corrections during the last big Melt Up in stocks in the late 1990s.

History suggests we're likely to experience several gut-wrenching corrections as this Melt Up plays out, too.

In fact, the first of these corrections may already be underway...

The benchmark S&P 500 Index closed down more than 100 points today – or roughly 3.4%. It was the index's biggest one-day point and percentage decline since February 2018.

Today's decline follows new fears around the ongoing "coronavirus crisis." As our colleague C. Scott Garliss noted to Stansberry Newswire readers this morning, it now appears that the virus is starting to spread rapidly outside of China...

Late last week, the number of infections began to rise in South Korea. And over the weekend, the government in Seoul raised its virus alert to the highest level. President Moon Jae-In stated the next few days would be crucial in trying to contain the spread and the country faced a "grave turning point." Stressing his worry, the president said authorities should use unprecedented measures without being restricted by regulations...

The rise of virus cases in Italy also grabbed the headlines over the weekend and this morning. The country has now placed more than 10 cities in the country on lockdown. It has banned public gatherings and closed schools to try and contain the spread. More than 50,0000 people are on lockdown and banned from leaving their areas.

To date, most of the damage has been contained to China. But as Scott explained, the fear is that the outbreak in these countries could ultimately spread to the major economies of Europe and the U.S.

We'll be following this situation closely...

While it's still a long way from happening, a true pandemic could tilt the global economy into recession. And that shift would almost certainly weigh heavily on stocks.

(Though we're willing to bet that the Federal Reserve and other global central banks would unleash another massive round of stimulus in response.)

All we can tell you is this...

Coronavirus fears are a great excuse for a market that's long overdue for a correction. As we noted earlier this month, several short-term indicators have been flashing warning signs for weeks... and these signals have only grown stronger.

Outbreak or not, a sharp sell-off was bound to come along sooner or later.

For now, we continue to recommend a cautiously bullish stance…

As our colleague Vic Lederman reminded readers in the February 10 Digest, investors have had plenty of "real" reasons to sell stocks over the past 10-plus years. And yet, they all turned out to be absolutely wrong.

Meanwhile, despite today's fears, Steve says we now have the first real confirmation that the Melt Up is underway. If he's correct, the biggest gains of this bull market are yet to come.

One last thing...

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In today's mailbag, one subscriber shares why he's inclined to keep money on the sidelines, and a few others reply to Thomas Carroll's Friday Digest on health care reform. Do you have a comment or question? E-mail us at feedback@stansberryresearch.com.

"Longtime reader, student and investor. Many of your authors comment on [the] large amount of money and number of investors on the sidelines. One issue causing me significant concern is the political turmoil [the] country is experiencing as we move to November elections.

"I hear no one in Democrat field portraying anything encouraging for business, the stock markets or the small amount of wealth I have accumulated. This uncertainty certainly has affected my investing philosophy as well as my time horizon. [It's] perhaps better to stay mainly in cash and gold and favor a short-term options strategy." – Stansberry Alliance member Thomas S.

"I think Thomas Carroll is over-emphasizing the importance of medical reform in this election. There is a new demographic in the United States now that doesn't need medical reform because it [has] something much better. It's called youth.

"The demographic that voted Obamacare is on its death knell just like the Democratic party. I live in a state that traditionally votes Democrat. People I talk to are more interested in their next quad-cab pickup truck, the new house they are building, or the private schools their kids are attending.

"I constantly see talk about medical reform in the media (they inaccurately call it "health care"), but I never hear regular people of any age talk about it." – Paid-up subscriber Robert G.

"Good commentary by T. Carroll. However, it is not healthcare that was attempted to be reformed by Obamacare, nor is it what Sanders/Warren want to fix. It is health insurance reform.

"The healthcare delivery system, which is broken, is hardly ever addressed. Obviously there are issues where the insurance system is also quite flawed, but the delivery system and its payment structures are what is most flawed.

"But nobody wants to take that on. Specialists are overpaid, family practice doctors are underpaid. Hospitals are inefficient and overpaid. Malpractice extracts a heavy cost to the system. Drug companies need to recoup their R&D somehow, but only the U.S. pays for it. Anyway, you get the point." – Paid-up subscriber Pat P.

"If I claim to know 10% of what you know about investing, it would be an overstatement. But I know Medicare and Medicare Advantage very well. And I think you nailed it about Centene becoming a leader in the future.

"They are in our market as Allwell and Ambetter. Recently, they acquired Wellcare. They take small steps at a time while becoming quite proficient at what they do. They've also secured agreements with Walmart in providing over the counter items offered in their plans. I look forward to seeing if they are able to clean up the Aetna Medicare Prescription Drug plan mess.

"A lot of senior citizens are paying more than they should because of our government's misplaced antitrust thirst. I look forward to seeing your recommendations in this area – especially if the Democrats are successful in the coming election. Thanks for your insights!" – Paid-up subscriber David M.

Regards,

Justin Brill
Baltimore, Maryland
February 24, 2020