By Zach Scheidt
This post Nobody Else Believes Me… Do You? appeared first on Daily Reckoning.
For months I’ve been pounding the table on the U.S. market.
I’ve been telling you how the economy is strong, and how the wealth effect is spreading across the country which is leaving people with money to spend and capital to invest.
I’ve talked about the strong job market, about rising wages, and about higher home prices and growing corporate earnings…
And as I’ve explained, all of these factors are bound to drive the market higher once this pullback runs its course.
But one chart I came across today shows that not many of you are listening. And I’m worried that you might be one of the many people who will be left behind…
Retail Investors are Missing Out
Six months after the words “trade war” started hitting media headlines, the U.S. stock market is very close to hitting all-time highs once again.
As I type, the S&P 500 is within a half percent of the high hit in January. And there’s a good chance that by the time you open your inbox and read this alert, the market may already be trading at a brand new high.
But most investors won’t be celebrating the move.
Instead, they’ll be kicking themselves for pulling out of the market when things got scary. And they’ll be trying to find the best way to get their money back into the market before it’s too late.
Take a look at the sad chart below to see what I’m talking about:
You can see the red line (which is the U.S. stock market) inching closer to hitting new highs.
But at the same time, the green line shows the level of confidence that individual investors have in the market. With the green line so much lower, I can tell that investors are skeptical and have pulled money out of the market because they’re afraid.
Now, it doesn’t take a rocket scientist to figure out that you don’t want money on the sidelines when the market is hitting a new high. But that’s exactly the position most Americans are in right now. Because they’ve been told to be fearful of a trade war.
It’s sad for the people who aren’t participating in the market right now.
But if you’ve been listening to my advice and you have your money invested in the strongest companies that are growing earnings, this chart is actually very exciting! Because it tells you there is a lot of money on the sidelines just waiting to help you grow your investment profits.
Let me explain further…
When Sentiment Shifts, Stocks Go Parabolic
If you think the current market rebound is good, wait till you see what happens when investor sentiment starts to shift.
Remember all those investors who are afraid of a trade war right now?
Those same investors will soon have a new fear — the fear of missing out on the market’s rally!
It’s simply human nature. Some investors follow their “instinct” and get out at exactly the wrong times, and then get back into the market late as well.
The good news is that if you understand this human nature, and you act ahead of the herd’s instinct, you can accumulate some serious profits along the way.
Here’s what I expect to happen over the next few weeks (and possibly over the next few hours)…
The market is going to break to new highs. This ties directly to higher earnings from companies who are reporting second quarter profits.
As the market hits new highs, trend followers and other short-term traders will buy the “breakout” which will send stocks even higher.
At that time, the investors who bailed out of their positions because of trade war fears will realize that they missed the boat. They’ll call their brokers, pick out their favorite stocks, and buy shares hand over fist. After all, they have to make up for lost time after getting out of the market at the wrong time.
All of these buy orders will send stocks sharply higher.
And that’s the time when you should start thinking about taking some profits off the table. In other words, you want to sell at least some of your shares when everyone else is excited about owning stocks.
This is how professional traders make money. It’s how savvy investors grow their wealth. And it’s how successful speculators take advantage of the opportunities the market is giving them.
I want you to be in the winning camp!
So please, make sure you’re in place to profit from the next market breakout. It could be just hours away!
Here’s to growing and protecting your wealth!
Zach Scheidt
Editor, The Daily Edge
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