Game of Trades: Investors are About to Get Sucked Into the WORST SP500 Move in History
The market is throwing off a number of recessionary signals. Spiking oil prices. An increasingly hawkish Federal Reserve. And many expecting a greater chance of a recession.
However, market fears can change on a dime. A reversal could lead to a move in markets back to their old all-time highs. And even to new highs. Why? Because markets tend to discount potential moves in the economy before they can occur, even when warning signals come out.
For instance, the stock market moved higher into 2007 even as many warning signs were in place similar to today. That includes soaring oil prices. And an inverted yield curve.
In the time it takes for these events to impact the economy, markets often have one final push higher.
It’s sometimes known as a melt-up. And when it’s happening, it tends to drive investors into the market. When it ends, it’s not pretty.
Right now, we may be in the final stages of a market reversal that could lead to new all-time highs. But after that, we could be back into a recession, and markets will tank. Investors should look for signs of a melt-up and look to profit, while being mindful that when it ends, they’ll want to be prepared.