Sjug's 'Obvious' Trade Is Breaking Out

Sjug's 'obvious' trade is breaking out... The latest on the 'Melt Up'... 'You still haven't missed it yet'... Dow Theory remains bullish... We're live from Las Vegas... It's not too late to see all of today's presentations for yourself...

We wrote it... Did you buy it?

In the May issue of True Wealth Systems, Steve Sjuggerud shared an unusual opportunity. You see, unlike most of the opportunities Steve recommends, this one wasn't "off the radar." In fact, Steve said it was downright obvious...

The great trades are typically hidden away... But not always.

Sometimes they are right there in front of you – in plain sight.

They are so obvious that you don't see them until it's too late. And then you say to yourself, "How did I miss that one?"

This month, we have an obvious trade. Nobody is talking about it. And more importantly... nobody is in it yet. It's a trade people will kick themselves in hindsight for missing, but it's here right now.

It's a trade with incredible upside potential, based on history. In short, when this sector gets going, hundreds-of-percent gains are possible – without any leverage. It soared 2,631% in the late 1970s. It soared 508% in 14 months in the early 1980s. And its uptrend is getting started again today.

It's as obvious as it gets. And nobody is in on it – yet.

As True Wealth Systems subscribers know, Steve was referring to homebuilders...

If you've been with us for long, you likely know Steve has been bullish on U.S. housing for years. He was one of the first analysts anywhere to turn bullish back in 2010 and 2011.

And Steve remains bullish today... In short, he notes housing supply simply can't keep up with current demand. More from Steve...

Long story short, there is no housing inventory.

According to the National Association of Realtors... total housing inventory "has fallen year-over-year for 22 straight months."

So this becomes a simple math problem... What happens to prices when there's a lot of demand for something, but no supply? Prices go higher.

And that's what we have in the housing market today.

Let's take a closer look. Here's a chart of housing inventory – existing homes that are currently available for sale in the U.S. As you can see, it hit a record low recently. Take a look:

As Steve explained, this chart suggests the housing boom still has a long way to go...

Despite the big rally in prices over the past seven years, prices are likely to continue higher from here. And homebuilders are ideally positioned to benefit...

Homebuilders are the simplest way to profit from a major housing boom. They're the companies that build the actual houses... So naturally they tend to perform well when the housing market is in good shape.

Today's trade is a rare case where I won't have to convince you that it's a good idea – you already know it...

The story in the housing market is simple...

The housing market is booming... but there's no supply... there's no inventory. This means the boom will continue.

It's the perfect setup for homebuilders to succeed.

And history shows when homebuilders boom, they can boom like few other sectors of the market...

Steve noted these stocks rallied 419%... 2,631%... and 776% during the last three big bull markets.

Yet, despite this "obvious" upside potential, Steve noted no one was interested. In fact, according to one important measure, investors were as disinterested in homebuilders as they have been in at least four years...

In 2013, the iShares U.S. Home Construction Fund (ITB), the main homebuilders exchange-traded fund (ETF), had over 100 million shares outstanding. Today, that number is less than half of that – below 50 million shares outstanding.

As regular readers know, ETFs like this one can create and liquidate shares based on demand. So a falling share count tells me that no one is in this trade... No one is buying homebuilders... yet.

See for yourself:

Better yet, homebuilders weren't just hated... they also met another of his favorite investment criteria: they were remarkably cheap. More from the issue...

There is real value in these companies right now. After years of a housing boom, you'd expect homebuilders to be expensive... But they aren't.

ITB's top five holdings are the five major homebuilders in the U.S. They make up 43% of the fund. Surprisingly, these companies are trading at a big discount to the overall U.S. market. Take a look...

So we have a sector that is completely ignored by investors... is cheaper than most stocks right now... and has a history of massive booms. This is perfect.

Shares of ITB closed at a fresh 52-week high on Tuesday...

True Wealth Systems subscribers who took Steve's advice are already up 11% in less than five months. But Steve believes the real gains are yet to come.

And the latest data suggest he's right. Home prices rose again in July as the supply and demand imbalance continues. As Bloomberg reported yesterday...

Home prices in 20 U.S. cities climbed more than forecast in July, reflecting solid demand against a backdrop of modest listings of properties, figures from S&P CoreLogic Case-Shiller showed Tuesday.

Buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices...

Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida.

Of course, regular readers know Steve remains incredibly bullish on U.S. stocks as well...

He believes the "Melt Up" – the explosive final phase of the eight-year bull market – is underway.

On Monday, we noted that one of the final parts of Steve Sjuggerud's long-held prediction is now falling into place... Individual investors are finally getting bullish on stocks again.

This suggests that Steve is exactly right... And the biggest gains of the rally may be on the horizon.

In yesterday's edition of our free DailyWealth e-letter, Steve shared one more sign that the Melt Up isn't even close to over yet. Here's Steve...

"Oh man, I already missed out on the 'Melt Up.' I should have bought exciting tech companies like Facebook and Google a year ago. Now, it's too late..."

I hear that all the time. But – my friend – you're wrong... You haven't missed the Melt Up – at all.

In the last year, Alphabet (GOOGL) – the parent company of Google – is up nearly 16%. Facebook (FB) is up around 33%. Those are good returns, for sure. But they don't tell the full story...

The surprising truth is that over the last year, the boring, old-school companies of the Dow Jones Industrial Average have beaten the "hip" tech names in the Nasdaq Composite Index.

As Steve explained, the Dow Industrials are up more than 25% over the past 12 months, while the tech-heavy Nasdaq is up less than 23%...

The truth is, these two differing indexes have actually followed a fairly similar path over the last year. The Dow has just come out on top. You can see it in this chart:

Why is this notable?

It's virtually identical to what happened through the first half of 1999, during the last Melt Up. More from Steve...

For almost half of the last year of the tech boom, the tech names and the old-school names tracked each other. But then things changed dramatically... Take a look:

By the end of the last 12 months of the dot-com boom, the tech-heavy Nasdaq was up more than 100% – meanwhile, the Dow delivered ZERO return.

To Steve, the bottom line is simple...

This tells me you haven't missed the Melt Up yet – the final months when the more speculative names start to blast off.

I believe that it hasn't even started yet... But it will...

You can offer up a lot of excuses for why you're not invested. But don't tell me, "I already missed out on the Melt Up." That excuse is no good with me.

You haven't missed it yet. So if you're not invested, you still have time to fix it. Get in, now...

Speaking of bullish signs...

We also note that the Dow Jones Transportation Average is breaking out. As you can see in the chart below, it hit a new all-time high today...

According to the tenets of Dow Theory, this officially rules out the bearish potential "non-confirmation" we mentioned back in August.

For now, one of the market's oldest indicators agrees with Steve: The bull market continues.

We're live from Vegas...

Finally, as we mentioned yesterday, the Digest team is in Las Vegas this week for the 2017 Stansberry Conference and Alliance Meeting.

Don't miss tomorrow's Digest, where we'll be sharing highlights from the first day of the event. As we write, Steve is putting the finishing touches on his presentation. We can't share all the details here, but Steve tells us he'll be presenting some exciting new research on his Melt Up thesis.

If you aren't already joining us here in Vegas – or remotely, via our online "All-Access Pass" – it's not too late to see and hear all of today's presentations for yourself...

You see, our All-Access Pass also includes unlimited access to a video archive of the full event. You can watch all of today's presentations, as well as all of the rest from this year's event – whenever, wherever, and as often as you'd like – until December 31. Click here for all the details.

New 52-week highs (as of 9/26/17): WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), Huntington Ingalls Industries (HII), iShares Core S&P Small-Cap Fund (IJR), iShares U.S. Home Construction Fund (ITB), Lockheed Martin (LMT), NVR (NVR), and Sabine Royalty Trust (SBR).

Another quiet day in the mailbag... Are you joining us in Vegas for this year's Stansberry Conference (or watching from home)? We want to hear from you. Send your thoughts and comments to feedback@stansberryresearch.com. We'll be publishing some of our favorite e-mails throughout the week.

Regards,

Justin Brill
Las Vegas, Nevada
September 27, 2017