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Stocks Hit New Highs — Transcript

by Benjamin Cowen · 3,624 words · 517 segments · language en · Watch on YouTube

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0:00Hey everyone, and thanks for jumping
0:02back into the equity verse. Today we're
0:05going to talk about the S&P 500 as it
0:08has once again made new all-time highs.
0:11If you guys like the content, make sure
0:13you subscribe to the channel, give the
0:14video a thumbs up, and check out the
0:16sale on ITC Premium at into the
0:19cryptoverse.com.
0:21As a reminder, we do have the conference
0:23in Miami coming up in just a few months
0:25now. So, make sure you guys uh get your
0:28ticket. We've got a lot of great
0:29speakers coming and I would love to see
0:30you guys at the conference. Do know that
0:33in the lowest tier it currently includes
0:36the party that we'll have Saturday
0:38night, but we are running out of spaces
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0:45that change, you'll still be able uh to
0:47go even in that lower tier. Let's go
0:50ahead and jump in. So the S&P
0:53is now at 7750. So, this is still very
0:56much in line with how a lot of these
0:59midterm years play out. In fact, one of
1:02the things that we've talked about a lot
1:05is how we would likely see new all-time
1:08highs by the S&P going into sort of the
1:11August time frame that even could extend
1:14into September. And so, what we what we
1:17should realize is how has it played out
1:21in prior midterm years? When did we
1:23actually start to see corrections? Now,
1:25as a reminder, and I say this basically
1:27in every video I do on stocks, I
1:31buy index funds essentially monthly, and
1:34I don't concern myself too much with
1:36exactly where we are because it's really
1:39hard to time the market. Even though,
1:42you know, a lot of these corrections
1:44were during periods of weakness, they
1:46should in generally in general be used
1:49to figure out when to buy rather than
1:51when to sell in my opinion. But in this
1:54case, I want to talk about kind of where
1:56we are right now and are things aligning
2:00in the same way they have in prior
2:03midterm years. So, right now it's August
2:054th. The S&P is making new all-time
2:08highs. Once again, that is sort of the
2:10the base case that the stock market is
2:12is it heading to new all-time highs. But
2:15let's go take a look at when we got
2:17these corrections in prior midterm years
2:19and see, you know, if it if it might
2:22line up once again. So, if you go back
2:25to 2014, for instance, you'll see that
2:28the S&P got a correction um in in about
2:33what September. It started September
2:35about midepptember
2:38of 2014. It was about a 10% drop about a
2:4210% drop. Now, if you look at the day
2:46in which the top occurred, right, if we
2:48want to really nail down the day, and
2:50again, we shouldn't expect it to happen
2:51on the same day either way, but it
2:53started on September 19th. September
2:5719th. In 2018,
3:00when did the correction start?
3:03It started in September,
3:06but in this case, September 21st
3:10with a lower high on October 3rd. But it
3:13started technically
3:16September 21st. So you have September
3:2021st
3:22in 2018.
3:24And in 2014,
3:27if you go look at um uh 2014, you have
3:31September 19th. So
3:35mid to late September, right? So you
3:38have
3:40September 19th, September 21st. Now in
3:452022, it was different. In 2022, we were
3:48actually in a bare market and the top
3:50ended up occurring on August 16th,
3:53right? You can see that. And then we had
3:54a lower high on September 12th and then
3:56we ended up bottoming out in in about
3:58mid October. So that in that case it was
4:00actually mid August. So August 16th. So
4:04you have three midterm years.
4:07Right? You have three midterm years. And
4:10in all three cases, the stock market had
4:14about a 10 to 20% drop. Right? In 2014,
4:18it was 10%, in 2018, it was 20%. And in
4:212022, it was in fact around 20%.
4:25So, where we are right now, the S&P is
4:29putting in new highs. Okay. Well, the
4:32only time it wasn't really putting in
4:34new highs at this point in the midterm
4:36year was in the 2022 bare market when it
4:39was going up, but it wasn't putting in
4:40new highs because we were actually in a
4:41bare market, right? Whereas the S&P in
4:432026 has been in a bull market. In 2018,
4:47you can see the S&P was pushing to new
4:49highs throughout all of August and even
4:51going into September. If you look at
4:542014 again, you can see that it was
4:57pushing to new all-time highs uh in in
4:59August and September. So, what you're
5:02seeing happen right now in the stock
5:03market is is actually really similar to
5:05what we've seen previously happen in the
5:06stock market in midterm years. And this
5:08is why when we talked about this phase
5:13up here, right? When we looked at this
5:14phase up here,
5:16we said that we could very easily see
5:19new highs before the correction occurs.
5:21And the reason we said that is because
5:24the correction normally doesn't start
5:26until August or September. If we were
5:29already in the correction in late July,
5:32then the high would have actually been
5:33in early June, that would have been very
5:36different than what we've actually seen
5:38in prior midterm years in recent
5:40history. So, my argument here is that
5:44the S&P again is breaking out. um could
5:48stay bullish for a number of weeks, but
5:51that come later August or even more
5:54likely September,
5:56I think the tides could shift. Now,
6:00what is interesting about 2014 and 2018
6:06is that the correction started on
6:09September 19th and September 21st.
6:14Coincidentally,
6:16or maybe not coincidentally, the next
6:19Fed meeting is September 16th.
6:22And if you look at the probabilities
6:25right now, the probability is about a
6:29coin flip or so, right? It's about a
6:31coin flip. You're looking at about a 57%
6:34chance of a rate hike, a 43% chance that
6:38they do absolutely nothing. And
6:42what I sort of tend to think right now
6:44is that the way this could play out like
6:48it has played out in the last three
6:50midterm years would be to get a
6:53correction starting around the time of
6:55the next Fed meeting again which is
6:58about five or six weeks away about 6
7:01weeks away. And the reason I say that is
7:05because there's an argument to be had
7:08that if the Fed does raise rates at the
7:11next meeting.
7:13And remember, the first time they cut
7:14rates in 2025 was in September. The
7:16first time they cut rates in 2024 was in
7:18September. So perhaps they will raise
7:20rates in September. And a lot of people
7:22have said, "Well, they're not going to
7:22raise rates in September." And they
7:24might not. Like I don't I don't know for
7:25sure that they're going to, but I would
7:27argue that September might be a better
7:29month to do it than a week before
7:31midterms. and waiting until December
7:34might cause the bond vigilantes to just
7:37absolutely revolt if they wait until
7:39December. So
7:42if we were to get a rate hike in
7:46September, then you might see that
7:49correction occur
7:51just because people are worried. Not
7:53because the economy is necessarily
7:54crumbling, just because people are
7:56worried that the easing cycle is over
7:58and then we're going back into a a
8:00hiking cycle.
8:03If the Fed were not to raise rates in
8:06September, then the argument would
8:07simply be that the long end of the yield
8:09curve is going to go higher. You're
8:11likely going to have the 10-year yield
8:12breaking out above 5%. It's already
8:14heading in that direction now. Uh, you
8:16know, if you look at the 10ear yield,
8:17it's at 4.6%.
8:19And my guess, and we've been talking
8:21about this for a while, is that it will
8:22likely head back up to where it was in
8:24October of 2023. Note, the 30-year yield
8:28has already made it there, right? The
8:3030-year yield has already broken through
8:31where it was in October 2023. So, I
8:34think it's only a matter of time before
8:36the 10-year yield uh gets there as well.
8:39And I I think that's something important
8:40to watch here over the next couple of
8:41months. So, going back to the S&P, you
8:44know, when we think about what is the
8:46most likely outcome here,
8:49I think in the short term, you're likely
8:51going to see more or less the same
8:53stuff. The S&P is has sort of broken
8:55out. You're likely going to see this
8:57bullishness continue would my guess
8:59would be for at least a few more weeks.
9:01Um, unless we're just going completely
9:03faked out and sometime
9:07potentially in October, but I would lean
9:09towards September at this point.
9:11sometime in September
9:13getting that correction that then ushers
9:16in what I would consider to be the
9:18market cycle bottom for Bitcoin. Now,
9:21when I talk about a correction in stocks
9:23that will likely occur starting in
9:25August or September, I'm saying it
9:26starts then. I'm not saying it finishes
9:28then. So, for instance, in 2018, it
9:33would have been objectively true that
9:35the stock market would have started
9:36correcting in September because that's
9:38when it topped. But would it have become
9:41obvious to everyone by early October?
9:44No. The correction did not finish until
9:47December.
9:49In 2014, if you said that the stock
9:52market would start a correction around
9:54September, would you have been right?
9:57Yeah, you would have been. Because when
9:59you look at at where the stock market
10:01was on September 20 or sorry, September,
10:04what was it? 19th. September 19th, it
10:06was at all-time highs, but it in it
10:09didn't bottom out until about
10:10mid-occtober. And in 2022, when the
10:13stock market found a high in mid August,
10:17the low wasn't set again until
10:19midocctober. So the argument to be made
10:22here in my opinion is that if the
10:26correction occurs in the same way it did
10:28in the last three midterm years, while
10:32the correction would start more than
10:33likely in September or potentially as
10:36early as August, while it would start in
10:38September, it probably wouldn't be over
10:40in September. It could go into o it
10:42could go into October. It could go into
10:44November. And if it does what 2018 did,
10:46it could even go into December.
10:50If you look at the year-to- date ROI
10:54of the stock market in 2026 and compare
10:58that to 2014,
11:01you can see that the the correction that
11:03I'm talking about didn't occur until
11:05like later on in September. You see
11:07that? And if you compare it to 2018,
11:11you can see the correction did not start
11:13again until uh until September, but it
11:16wasn't obvious to people until October.
11:18And in 2022, it's going to look a little
11:20bit different because we were in a bare
11:21market, but you can see it didn't start
11:23until about mid August. So, if you were
11:26to average out
11:28the last three midterm years, let's call
11:312022, 2018, 2014,
11:35and look at where the S&P is, you can
11:38see that we're actually a bit higher
11:40than we normally are on average, but
11:42that the window of weakness on average
11:45doesn't really start until about that
11:47mid August to September time frame. So,
11:50we're seeing new new all-time highs
11:52right now. Again, I don't ever sell my
11:55index funds. Um, happy to see the stock
11:58market go higher, but I would argue that
12:00when we do get that drop, I think it
12:02would probably just be another another
12:04opportunity uh for those that that want
12:06to get in. We've had plenty of them um
12:09throughout the last several years and
12:12and this would likely just be one more.
12:15So, we'll see if that actually comes to
12:17pass or not. I mean,
12:19time is is kind of the uh the issue here
12:23in the short term of like, you know, in
12:24the short term S&Ps breaking out to new
12:26highs, that could very well continue for
12:29a number of weeks. Uh so, we're not
12:31going to really get an answer out our
12:32question until a couple of months from
12:34now. And we'll either be looking back
12:35and saying, "All right, well, the S&P
12:37found a local top in August or
12:39September, or it didn't." And my guess
12:41is that it will. Um, but the thing I
12:44would caution people to about trying to
12:46time the markets too much is let's say
12:49you get a 10% drop, right? And you're
12:51waiting for that. There's always a
12:52chance that the 10% drop is to a lower
12:54is to a higher price than where you
12:56could have just bought in the first
12:58place. Okay? So, it's important to
12:59remember that I'm I'm primarily using
13:02the S&P in this case to try to
13:05understand when Bitcoin's
13:07theoretical market cycle bottom would in
13:10fact be. And normally the market cycle
13:14bottom for Bitcoin
13:16occurs in the in the correction the
13:19stock market that occurs in the back
13:20half of the year. So in 2022, the stock
13:25market had a correction early on, but it
13:26wasn't until the second correction that
13:28Bitcoin bottomed. In 2018, the stock
13:31market had a big correction early on,
13:32but it wasn't until the second
13:33correction that Bitcoin bottomed. And in
13:352014,
13:37the stock market had a small correction
13:41um early on in the year, but it wasn't
13:43until the the larger correction that
13:45occurred later, which was to a higher
13:46low, but a larger correction by
13:47percentage. It wasn't until that
13:49correction that Bitcoin actually
13:50bottomed. And so the argument is that we
13:54are simply repeating the last three
13:57midterm years. We already have the
14:00original correction in the beginning of
14:012026, right? Like you can see we have
14:03it. So you have, if you were to label
14:05these, you have one, one, one, your
14:07first correction. And in each case, you
14:09have a second correction that doesn't
14:12really kick off until mid August at the
14:15earliest or late September at the
14:19latest. And so that's the argument that
14:22this is going to play out probably in
14:24the same way that it has in the last
14:26three midterm years. And again, I'm just
14:29sort of a big believer. And if it's not
14:30broke, don't fix it. All right. Now, if
14:34you look at the S&P, it has um you know,
14:37basically it went sideways for a little
14:39while, found support near the bull
14:41market support band, and then went ahead
14:42and moved up. Um I was actually looking
14:46at this this this pattern. We've
14:48actually seen something like this before
14:49on the Bitcoin chart. Like if you look
14:50at the Bitcoin chart, you can see
14:53remember last year when Bitcoin, you
14:56know, it came below here, consolidated,
14:58went up, and then went sideways until
14:59almost the bull market support band
15:01caught up, and then it went up
15:03and then eventually it came back down.
15:06To me,
15:08it looks a little familiar. Like I'm not
15:11huge into fractals and whatnot because
15:14they usually don't play out um in the
15:16way that that many people think they
15:18will. But if you were to simply overlay
15:22the idea, right? If you were to overlay
15:25the idea,
15:27you can kind of see like, you know, what
15:29it is I'm talking about, right? How you
15:32you you get your your low,
15:36right? like you get your low that forms
15:38and it's hard to know exactly how to
15:40line up, but you get your initial low
15:41that forms, you rally on up, you go
15:43sideways, you push up, and then
15:44eventually you get a deeper correction.
15:46And so that's the argument is that when
15:48you get a deeper correction, likely
15:51later this year that you're basically
15:54checking back in with this longer term
15:57trend line in the S&P 500. Now, I don't
15:58know if I don't know if it's going to go
15:59all the way back down to 6,000 or not,
16:01but it's a possibility. And imagine if
16:04it did. I mean, that would be a pretty
16:06brutal correction. If it did, that would
16:09very likely cause Bitcoin to lose that
16:11support that it has at at 60K. Now, if
16:15it doesn't, I could be wrong. I could be
16:17wrong. If you look at Bitcoin in 2018,
16:20remember, it held support at $6,000 for
16:23the entire year. And it wasn't until the
16:26second correction by the stock market
16:28that that actually that actually took
16:29Bitcoin down to those lows, right? So
16:31the stock market didn't even go that
16:33much lower than where it was at the
16:35beginning of the year.
16:37So if you look at the first correction
16:38it had in 2018, the stock market only
16:40went about 7 to 8% below that. But even
16:43though the stock market only went 7 to
16:458% below that, Bitcoin
16:49went about 48% below. Now if you look at
16:52Bitcoin this year, this is certainly a
16:54less volatile version of 2018, right?
16:56Right? If you look at the year-to- date
16:57ROI of Bitcoin
17:00in 2026 and look at it compared to 2018,
17:03you can see it kind of the moves kind of
17:05line up, but we haven't had, you know,
17:10that larger correction in the S&P yet
17:12that normally occurs, not even starting
17:14until August or September. Remember, I'm
17:16not saying the correction in stocks ends
17:19in September. I'm saying it could not
17:21start until September. And if you look
17:24at two of the last three stock market
17:26corrections that occurred in midterm
17:28years, they didn't start until September
17:2919th or 20th, which is around when the
17:31next Fed funds meeting is. So you could
17:34argue if they raise rates, people might
17:36panic, even though there's probably
17:37nothing to panic about. And if they
17:38don't raise rates, people might panic if
17:40inflation continues to print levels that
17:42are are somewhat concerning. And I think
17:44the the thing to watch here is just the
17:46bond market because the bond market is
17:48is where a lot of this stuff is going to
17:50play out. Does the 30-year yield
17:52continue to go higher? Does the 10-year
17:53yield continue to go higher? If yields
17:55continue to go higher for the next, say,
17:57six weeks or so, then it certainly would
18:00set up the the only narrative you would
18:02need to get sort of a secondary
18:05correction in stocks in the back half of
18:06the year, the back half of of of the
18:09midterm year. So, that is is my view
18:13here on the stock market. And also too,
18:15I mean, with the dollar, I I think the
18:16dollar, while it is down recently, I
18:18think it's just simply printing a higher
18:20low. and is likely going to continue to
18:22head back up. One interesting thing
18:24about the dollar is if you look at the
18:28the presidential return path, so
18:31basically the the way in which certain
18:32assets perform during various
18:34presidencies. If you look at first of
18:36all, if you look at the S&P in 2026,
18:39like if you look at the current S&P
18:40compared to Donald Trump's first term or
18:42his first term, we're basically at the
18:44same valuation we were back then. You
18:46know, like things are really not that
18:48different. What's also interesting is if
18:50you look at the dollar, the Dixie DXY in
18:53Trump's current term compared to 2017
18:562018, um you can see it's also tracking
18:59basically the same. And if it continues
19:01to track, then the dollar should get
19:03another move higher a little bit later
19:04on in the year, which might actually be
19:07that headwind that causes these risk
19:09assets to show weakness one more time a
19:12little bit later on in the midterm year.
19:13So again, my encouragement, again, not
19:15financial advice, but my encouragement,
19:17generally speaking, is to use this stuff
19:19to figure out kind of good opportunities
19:21to get in, not try to time things on
19:23when to sell or anything like that. I my
19:26strategy for the last five or six years,
19:28as I've mentioned, is to just buy low
19:31expense ratio index funds and hope for
19:32the best. And I mean, it works out
19:34decently well. It it works out better
19:36than a lot of people that just stock
19:38pick constantly. Um, and I do
19:40occasionally buy some stocks, but or
19:42individual stocks, but index funds with
19:43low expense ratios are, in fact, my
19:45opinion, they've been a good way to go
19:46for for a long time. So, those are my
19:49views about the stock market. We're
19:50currently at all-time highs. Usually,
19:52all-time highs just lead to new all-time
19:54highs, which I know kind of sounds
19:55weird, but it's true, right? When the
19:56stock market's putting in new all-time
19:58highs, it tends to continue to want to
20:00for a little while before that before
20:02that changes course. And if history is
20:04any indication, we won't likely see that
20:06change course until at least mid August
20:09at the earliest, but maybe not until say
20:12midepptember if it's going to play out
20:13like it did in 2014 and or 2018. If you
20:17guys like the content, make sure you
20:18subscribe to the channel, give the video
20:19a thumbs up, and I'd love to see you
20:21guys at the Investing Through the Cycles
20:23conference taking place in Miami this
20:25November. Make sure you guys get your
20:26ticket. Links in the description below
20:28or the pinned comment. I'll see you guys
20:30next time. Bye.

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