This 'Emerging Market' Is About to Take Over the World

 
One country is taking over the world…
 
It already has the world's largest population… Soon, it will surpass the United States as the world's biggest economy. In time, it will have the world's largest stock markets, too.
 
It's not a matter of if, but when…
 
The total market capitalization of the world's stock markets is now worth more than double what it was 13 years ago. And a lot of that growth has come from China…
 
Market capitalization (or "market cap") is a measure of the size or value of a company. To find it, you multiply the price of each share by the total number of shares outstanding. (You can also think of this as the price of buying a whole company outright.) "Total market cap" is a measure of all company values worldwide.
 
From a market cap of around $500 billion in 2004 (about $250 billion less than Apple's market cap today), China has grown to $7 trillion.
 
The country is now the second-largest economy in the world. And it has come out of nowhere to take second place in the world's market-cap ranking. You can see this laid out in the following table…
 
The total value of global stock markets has risen 127% since 2004. Market cap for the whole world now stands at $71.5 trillion. The U.S. has – in absolute terms – accounted for much of that growth, though U.S. markets are up a relatively modest 92%.
 
Other "developed" markets, like the U.K., France, Canada, and Japan, have seen their market caps grow by much less… The U.K. is up just 37% since 2004. And France has risen 51%. Slow economic growth, eurosclerosis, and endless union and currency troubles have crippled European markets.
 
But the real story here is China. Since 2004, the country's market cap has grown an incredible 1,242%.
 
In just 13 years, China's market cap has surpassed every country in Europe. Today, China's stock markets are worth more than those of France, Germany, and Switzerland – combined. European markets are losing their influence.
 
This tremendous growth in market cap also means that China's markets now account for a much larger share of the world's total, as you can see in the table below…
 
The relative size of American stock markets has fallen sharply. Today, the U.S. accounts for 37% of the world's stock market cap, compared with 43% in 2004. The decline of Europe's markets has been even sharper.
 
But it has been the opposite for China. In 2004, even tiny Switzerland and sparsely populated Canada had larger stock markets than China, which had 1.7% of the world's market cap at the time. But it now has 9.8% – that's more than five times more in just 13 years.
 
What does all this tell us?
 
The center of economic and market gravity has long been shifting toward the East. Though Western economies still pull the most weight, their relative size is shrinking. And this is most visible where investors vote with their feet every day (or, as it happens, with their clicks): the stock market.
 
The U.S. is still the world's largest economy… for now. Europe is in decline. But China has arrived – and it's only a matter of time before it outstrips the West, in terms of stock market size and more.
 
China is no longer an "emerging" market. It has already emerged. But that's not the end of the story… In terms of China's economic growth, it could be just the beginning.
 
Regards,
 
Kim Iskyan
 
Editor's note: Kim is the publisher of our Singapore- and Hong Kong-based affiliate, Stansberry Churchouse Research. He and his team have lined up some spectacular speakers for a June conference in Hong Kong… all part of Steve's 2017 Asia Investment Opportunities Conference Series. It's going to be an extraordinary trip – to the most dynamic economy in the world. You can learn all about it right here.

Source: DailyWealth

This Rare Setup in Spanish Stocks Won't Last Long

 
You can buy Spanish stocks today at 1998 prices…
 
That's crazy, right? It's rare to see an asset trading for the same price it was 20 years ago. But that's the reality in Spanish stocks right now.
 
However, this situation won't last for long… Spanish stocks just broke out to a 52-week high. And history says they should continue higher as a result.
 
Let me explain…
 
The iShares MSCI Spain Capped Fund (EWP) broke out to a new 52-week high earlier this month. It trades around $30 right now. But here's the crazy thing…
 
That's the same price it traded for in late 1998… nearly 20 years ago.
 
Spanish stocks – as measured by EWP – have gone nowhere for 20 years. It's hard to believe, but it's true.
 
Not surprisingly, Spanish stocks are a better value today than they were in 1998…
 
EWP trades at a price-to-earnings (P/E) ratio of 17 right now, compared with a P/E ratio of 24 in late 1998. But Spain won't stay cheap for long…
 
Take a look at what has happened. After falling for most of the past two years, EWP is back in an uptrend…
 
Again, EWP has been hitting new 52-week highs this month. And that means the gains could continue.
 
We looked at every time EWP reached a 52-week high since 1996. And Spanish stocks tend to outperform after these breakouts. The table below shows the returns…
 
 
3-Month
6-Month
1-Year
After extreme
2.2%
3.3%
8.2%
All periods
0.9%
1.9%
3.8%
EWP has produced a small 3.8% annual return since 1996. But buying after breakouts led to much better gains.
 
Buying when EWP hit a 52-week high led to 3.3% returns in six months and an 8.2% return over the following year. That's double the typical buy-and-hold return in Spanish stocks.
 
These aren't blockbuster returns. But Spanish stocks are most exciting because of the rare situation they present today…
 
Spanish stocks are trading at 1998 prices. They just hit a 52-week high. And history says they'll likely outperform as a result.
 
Now is a smart time to put money to work. And buying shares of EWP is the easiest way to make the trade.
 
Good investing,
 
Brett Eversole
 

Source: DailyWealth

The Most Contrarian Trade You Will Ever Make

 
What kind of fool would bet on LOWER interest rates?
 
I would! And I did – earlier this month. Now we're making money on the trade!
 
I know it's hard to imagine that interest rates could go down. Everyone is betting on higher interest rates.
 
Let me share the story with you…
 
The latest issue of my True Wealth Systems newsletter was titled, "The Most Contrarian Trade You Will Ever Make." It went out earlier this month.
 
The benchmark interest rate has fallen from 2.64% on March 13… to 2.37%, as I write. (The "benchmark" interest rate is the interest rate on the 10-year U.S. government bond.)
 
A fall from 2.64% to 2.37% is a massive decline in a little more than two weeks… So what's going on?
 
Let me share with you some of the exact words I wrote to my True Wealth Systems subscribers earlier this month:
 
Here's what we're seeing right now…
 
Bets on higher interest rates have hit an all-time extreme, based on one of our favorite sentiment measures – the Commitment of Traders (COT) report… It shows the real-money bets of futures traders in dozens of markets.
 
Like most sentiment measures, the COT report tends to be "wrong at the extremes and right in between"… [Futures traders] tend to pile into a trade at the worst possible time.
 
Recently, the bets on the benchmark 10-year Treasury bond in the futures markets hit never-before-seen levels. Take a look:
 
Futures traders are bullish… more bullish than they've ever been. That tells me this is a crowded trade.

So what could this mean for interest rates today? To find out, we looked at what happened at previous record highs.
 
We found that bets neared this extreme level only once before – in March 2005.
 
Back then, interest rates on the 10-year Treasury bond dropped from 4.6% to 3.9% in less than three months. Here's what happened…
 
The Fed was in the middle of raising short-term interest rates from 1% in 2004 to 5.25% in 2006. In 2005, futures traders thought it was easy money to bet on long-term rates going up too. They were wrong!
 
Now, this 2005 trade lasted about three months – that's the typical life of a sentiment-based trade.
 
And that's what we're talking about this month – a sentiment-based trade.
 
It is not a long-term prediction on interest rates. It is a short-term trade.

I can't share with you the exact trade I recommended to my paid subscribers. But what I can do is remind you that sentiment trades like this often last for about three months… So there's likely a bit more "meat on the bone" when you make a trade like this. It has big potential upside in a short period of time.
 
More important, I wanted to share a great example of what typically happens when investors are "all in" on one side of a trade… In short, you don't want to join them!
 
We're seeing a lot of parallels to 2005… Back then, the Fed was in the middle of RAISING short-term interest rates. Meanwhile, long-term interest rates shocked everyone and started falling.
 
That's exactly what we're seeing today…
 
Nobody believed long-term interest rates could fall while the Fed was raising interest rates… They didn't believe it in 2005. And they don't believe it now.
 
Earlier this month in my True Wealth Systems newsletter, we traded the opposite of, well, everybody. And we got it right.
 
If you're a subscriber who followed my advice, congratulations. You are bold. This should be the most contrarian trade you have ever made.
 
Good investing,
 
Steve
 
Editor's note: Steve's track record in True Wealth Systems is incredible. And he just put together a presentation on using his "D-30X" method to identify triple-digit opportunities in all corners of the market. To learn more about this breakthrough approach, click here.

Source: DailyWealth

Use This Little-Known Number to Find Explosive Stocks

 
Lots of traders don't know anything about it…
 
But you can look at a specific number for just about any stock you want to trade.
 
For most stocks, this number is insignificant. But when it's big enough, it can help you make a lot of money, very quickly.
 
It's one of the secrets behind our biggest winner so far this year in DailyWealth Trader (DWT)… a 52%-plus gain in less than eight weeks.
 
Today, we'll explain everything you need to know about this number. We'll explain what it is and why it's important… And we'll show you when to use it for the best shot at explosive gains.
 
Let's get started…
 
The number we're talking about is called "short interest." Short interest is the percentage of a company's tradeable shares that folks are holding short.
 
To break that down, when we say "tradeable shares," we're not talking about the total number of shares outstanding. Usually, insiders or major stockholders stash some percentage of shares away for the long term… So they don't circulate regularly. All the other shares that do circulate are available for trading. The number of these tradeable shares is called a stock's "float."
 
If you're familiar with short selling, you may already understand what we mean by "holding short." If not, short selling (or simply, "shorting") is a type of trade that allows you to profit from stocks as they fall. It's the opposite of buying a stock.
 
Here's how it works… When you place the order, your broker lends you shares and sells them in the open market. You get the cash from the sale.
 
Then at some point in the future, you need to repay the loan… You need to buy those shares and return them to your broker. (This is called "covering" your short.) If you pay more than you earned from the original sale, you take a loss on the trade. If you can buy the shares back for less, you keep the difference and profit.
 
So again, short interest is the percentage of a stock's float that traders have sold – and are holding – short.
 
To understand why short interest is important, let's think about how the stock market works…
 
When a stock rises, it means that the demand for shares is greater than the desire to sell shares. Folks may not want to sell their shares at $20… But they may be willing to sell at $21. If the buyers are eager enough, they'll pay up… And the share price rises.
 
Normally, the folks that are thinking about buying a stock don't have to buy. They can hold on to their cash and wait patiently for the right price… Or they can simply move on, and never buy.
 
That's not the case with short sellers. Short sellers must buy shares to close out of their positions. And if the stock they're holding short is rising, their losses are growing.
 
At some point, they're going to jump out of the burning building. Remember, a stock can only go down so far. But there's no limit to how much it can go up… especially if nobody is eager to sell their shares.
 
Short sellers often choose to cut their losses at a time when shareholders don't really want to sell. Maybe the company just released great earnings results, for example, and said its future prospects are good.
 
Whatever the reason, short sellers need to buy shares to get out of their losing positions. But if nobody wants to sell shares to them, they're stuck in the position. So they're forced to offer to buy at higher and higher prices until they can finally get out of the trade.
 
If the short interest is high enough, the stock can explode higher. Traders call this a "short squeeze."
 
If you have ever been on the wrong side of a short squeeze, you know it's painful. If you're on the right side, though – if you're a shareholder – it's a lot of fun…
 
For instance, take what happened recently in DWT when we bought shares of sparkling-water and soft-drink producer National Beverage (FIZZ). It's our biggest winner so far this year…
 
At the time of our recommendation, National Beverage's short interest stood at about 20%. Anything over 15% is a lot. So 20% is extreme…
 
To give that some context, short sellers were holding 2.3 million shares short when the average number of shares traded in a day was just 233,000 (over the prior 30 days). In other words, if all the short sellers wanted to close out of their positions, it would take them 10 days of normal trading to cover their shares.
 
This figure – the "days to cover" – can give you an idea of how big a short squeeze might be. Once you get past four or five days to cover, you have the potential for an explosive move.
 
We're making money on National Beverage because it's a great business, we bought it at a fair price, and the stock market is moving higher. But we're up more than 52% in less than eight weeks because of the massive short squeeze…
 
On March 9, National Beverage reported that its earnings per share for the quarter were up 117% from the same quarter a year earlier. If you were holding National Beverage short, that is not the report you were hoping for.
 
Shares rocketed higher as short sellers scrambled to get out.
 
To be clear, we do not recommend buying stocks just because they have a high short interest… When a lot of investors agree that a stock should fall, they often have good reasons. Some businesses have slowing sales or operate in dying industries (like newspapers or shopping malls). These companies can continue lower for years, and short interest has nothing to do with it.
 
But when you find a stock that you're already interested in buying, high short interest could be that final piece that gets you to pull the trigger. After all, it may take just one positive announcement to set off a big short squeeze… and lead you to explosive profits.
 
Good trading,
 
Ben Morris
 
Editor's note: Short interest is just one of many strategies Ben uses to identify trades with high upside potential. Recently, he told subscribers about a way to earn 30% or more by investing in an unstoppable, growing tech industry. Click here to access a risk-free trial.

Source: DailyWealth

Stocks Just Fell Six Days in a Row… Here's What Happens Next

 
Stocks just fell for six days in a row…
 
That does not happen often.
 
It wasn't a big six-day loss – just 1.4%. But you don't expect the market to go down for six straight days when it is in an overall uptrend, as it is right now.
 
So what typically happens to stock prices after a signal like this?
 
The answer might surprise you…
 
My friend Jason Goepfert (of SentimenTrader.com) wanted to find out what typically happens after six down days in the market…
 
He looked back at every time this happened over history. And he uncovered a truly astounding fact. Here's what he told me…
 
The Dow has now been down six days in a row, with a small total loss [<2.5%], during an uptrend. Since 1960, this has led to a positive return in the Dow over the next month every time.
Granted, this didn't happen often over the last 60 years. It only happened a total of 15 times – a couple of times each decade.
 
But the results were amazing. Again, stocks were up one month later, every single time.
 
The gains don't appear to be a fluke…
 
Stocks were also up six months later in all but two instances. And the story is the same looking one year out.
 
It's not often you come across a signal that was right – every time – going back 60 years.
 
So… should you trade it?
 
"We're not reading too much into this," Jason said.
 
Well… why not?
 
It's because 15 instances – a couple every decade – is not enough evidence to go on. And Jason dropped another important caveat:
 
"Prior to 1960, [this signal] had the exact opposite connotation," he said. Prior to 1960, six consecutive down days delivered losses down the road – most of the time.
 
It is a truly astounding fact – a setup that has been infallible for the last 60 years. However, we aren't planning on placing any one-month bets because of it…
 
You are welcome to trade it if you'd like. But to us, it's more of a "fun fact" than a trading system…
 
Regardless, we're in the late stages of a great bull market… And the biggest gains tend to happen at this point. The pattern after six straight down days may just be a fun fact to us, but we already expect that stocks have more upside ahead.
 
If you're not invested yet, you should be!
 
Good investing,
 
Steve
 
Editor's note: Steve believes we're at the start of a dramatic shift in the markets that could push the Dow all the way up to 50,000… And that we may never see an opportunity like this again. If you make the right choices over the coming months, you could turn every $100 invested into $1,000 or more. Learn how to capture the biggest gains (without sitting through a long promotional video) by clicking here.

Source: DailyWealth

Revealing the Key to 16.4%-a-Year Gains

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 Today, I'm going to walk you through all the details of how to make the type of options trade I recommend in my Retirement Trader advisory…
 
After today, you'll know all you need to use this strategy yourself… Or you can simply go back to your humdrum stock returns.
 
The strategy that I use is known as a "covered call." Using a simple example, I can show you exactly how this risk-reducing, return-boosting approach works…
 
If you follow the entertainment business at all, you may have heard of a movie script or story being "optioned."
 
This means a studio has approached a writer and expressed interest in turning his story into a movie. The studio pays the writer, say, $10,000 today to lock up the rights to the movie… And if the studio decides to move forward, it will buy the script from him for $100,000.
 
The screenwriter just sold the movie studio a covered call. He gets to keep the $10,000 he was paid up front, no matter what.
 
If the studio makes the movie, he makes more money. If the studio moves on, he keeps the option money and gets to sell his script again to another buyer after the first buyer decides not to exercise the option.
 
When the phone rings and you get an offer to have your script optioned, that's a day worthy of celebration.
 
 We can do something similar with the stocks we already own…
 
Longtime readers probably own some high-quality, capital-efficient "World Dominators" like tech giant Microsoft (MSFT) or chocolate maker Hershey (HSY) already.
 
If you limit yourself to traditional investments, you simply can't do better than stocks like these when it comes to building wealth.
 
But you can do even more with some options "frosting" today
 
For example, as a Microsoft shareholder, you can wait for earnings to rise and push the share price up. You can also wait for earnings expectations to increase – thereby leading the market to place a higher valuation on your shares.
 
But why not sell an option and collect cash early, just like the screenwriter?
 
Let's say you're sitting on 100 shares of Microsoft, which traded at about $64 per share earlier this week. Your total position is worth roughly $6,400. In the next two-plus months, Microsoft shares may rise or fall… And your wealth will do the same.
 
Instead, you could find someone to pay you cash today for the option to buy your stock at a later date. In Microsoft's case, you could quickly enter an option contract to sell your shares in June for $65. Earlier this week, you could have sold this call for about $2 per share.
 
This means you'd collect $200, free and clear. It would show up in your brokerage account immediately, and you could do whatever you'd like with it. It will never go away.
 
When the option expires in June, the call buyer will decide if he wants to buy your shares of Microsoft for $65.
 
If shares trade for more than $65, the buyer will take them from you… since he couldn't get them on the open market at that price.
 
If they still trade below $65, he won't want them. He'll leave them for you. In that case, you could sell another call option and collect more cash instantly. When that expires, you can do it again, and so on.
 
At the prices from earlier this week, you could collect about $800 a year on your $6,400 investment in Microsoft if shares don't move a penny. That's an extra 12.5% a year…
 
 And it gets even better… You see, selling covered calls also lowers your risk relative to holding stocks the usual way. Let me show you how…
 
If you've invested $6,400 in Microsoft shares, you have $6,400 at risk. But if you collect $800 over the course of the year, you now have only $5,600 at risk ($6,400 minus $800).
 
On a per-share basis, if you paid $64 for Microsoft but sell a single call for $2, your "cost basis" is now down to $62. This reduces your risk if (and when) the stock falls.
 
On the upside, if shares stay at less than $65, you've made a 3.1% profit ($2 on $64) without the stock price moving.
 
Here's how to think of a covered-call trade: You're getting a gambler to agree to pay you now for the right to pay you even more later. That's a winning move.
 
 Now, you may still have no interest in options. That's OK…
 
After all, this strategy doesn't produce "home runs." In fact, selling covered calls can limit your upside if your stock makes a big move. (For example, if Microsoft shoots up to $80 before expiration, you'll be stuck selling for only $65.)
 
So if you still believe that building wealth comes from making wild speculations to chase spectacular returns, then collecting cash payments from high-quality stocks over and over again may not appeal to you.
 
But if you've learned enough to understand that real wealth comes from limiting risk, you may never go back to investing the usual way again.
 
 I've been using this strategy in my Retirement Trader advisory since 2010…
 
We've recommended 171 different covered-call positions… and closed 162 of them for profits. That's a win rate of 94.7%.
 
At the same time, our covered calls have posted returns that consistently beat the market. Over the years, this strategy has produced an average annualized return of 16.4%.
 
When you post gains with a win rate above 90%, it's easy to stay in the market and keep trading. And when you can earn 15%-20% a year, your wealth compounds at an astounding rate.
 
At 16.4%, you'll double your wealth every four and a half years. I doubt the gamblers and speculators can claim anywhere close to these returns.
 
 If you've ever considered trying my Retirement Trader service for yourself, there has simply never been a better time to do so…
 
As you may have heard, I hosted a special educational webinar earlier this week in which I completely "pulled back the curtain" on this strategy… I even walked folks through a real-life trade they could make in their own accounts.
 
If you missed it, I'm sorry… But you're not out of luck just yet…
 
As part of this week's special event, we're also offering a massive discount off the usual cost of Retirement Trader… Better yet, if you take advantage today, you'll also get two full years of access to my income-focused Income Intelligence advisory, access to my "Master Course" educational-video training series, and much, much more… absolutely free.
 
There is simply no better or easier way to put this strategy to use for yourself immediately than by becoming a Retirement Trader subscriber. You see, while Retirement Trader will give you tons of excellent recommendations to earn safe, consistent income, I believe the educational value is even greater…
 
In fact, we spend the bulk of our time educating our subscribers… And we do everything we can to make sure they understand every aspect of every trade we publish.
 
When we recommend a new trade, we include a detailed description of all the possible scenarios that could play out. You will always know exactly what to do, what you're risking, what you stand to gain, and why.
 
Click here to learn to more about Retirement Trader… including all the details on this special, limited-time offer. But please don't delay… This deal won't be available much longer.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: It can seem daunting to learn options at first… But once you study Dave's advice and strategies – and learn exactly what you need to do – you can use his risk-reducing approach to generate safe income. And right now, Dave is extending a special, limited-time offer for a free year of Retirement Trader. Get all the details right here.
 

Source: DailyWealth

No Bubble in Real Estate – Not Even in Los Angeles

 
"Everyone here says Los Angeles is in a housing bubble," my friend in LA said to me this week.
 
Is it true?
 
Is American real estate in a housing bubble again, just like it was in 2006?
 
The short answer is no – not at all.
 
The smartest thing my friend could do is be bold, ignore "everyone in LA," make the contrarian choice, and buy a house (or two!).
 
Let's look at LA first – then the nation…
 
We can most easily see the story in LA with a couple charts…
 
The first chart is the median price of a house in LA, adjusted for inflation. You can see house prices soared in the mid-2000s… and then crashed:
 
At this moment, house prices are on their way back up… But importantly, they're still nowhere near their old peak prices.
 
I get why "everyone" thinks LA is in a bubble… $500,000-plus is a lot of money for a house. And that's what they cost in LA today.
 
But based on history, today's prices are not extreme at all for Los Angeles… particularly when you take today's extremely low mortgage rates into account.
 
This next chart does just that… It shows the Los Angeles "Housing Affordability Index." This index looks at house prices relative to household incomes and mortgage rates. It lets us know how "affordable" homes are.
 
This affordability index chart gives us an even clearer picture… Houses were extremely unaffordable in 2006. Then they were extremely affordable in 2012. Today, we're somewhere in the middle. Take a look:
 
In short, since LA homes are not near the extreme unaffordability that we saw in 2006, we are definitely not in a housing bubble in LA.
 
Can house prices in LA go higher from here?
 
Absolutely! Interest rates are still very low. And most importantly of all, there's a near-record low of existing houses for sale in Los Angeles.
 
This is basic economics…
 
If supply is low and demand is high, then prices rise. And that's the case in Los Angeles today – there is no supply.
 
But now let's shift our story a bit… because this supply story is not just an LA story – it's a national story…
 
Home listings in the U.S. just hit their lowest level since people started tracking the data.
 
The supply is not meeting demand. And that means that NATIONWIDE, house prices can continue higher from here.
 
See for yourself…
 
In 2008, home listings hit all-time highs. Supply hit record levels. What do you think happened next?
 
When there was too much supply relative to demand, prices crashed.
 
Now, house listings are at record lows. Supply is nonexistent. It's the opposite of 2008. So what do you think will happen next?
 
Housing starts are still well below normal levels, as well. With so few new homes and lots of demand, we have hit a major supply-and-demand imbalance in America.
 
And as long as there are more people searching for homes than there are homes to buy, home prices will keep rising.
 
I am still bullish on U.S. real estate today. As I said last month, if you buy today, you are not buying at the bottom. But there's still a lot of upside left!
 
If you are looking to buy a home – but you're worried that the housing market is "in a bubble" – then please, stop worrying. That "excuse" is no good with me.
 
There is no bubble. And because the current supply of homes can't meet the demand, prices can go dramatically higher from here.
 
Now is still a great time to buy a house in America!
 
With low interest rates, and no supply, prices can still go a lot higher…
 
Don't hesitate. Take advantage of it!!!
 
Good investing,
 
Steve
 
Editor's note: U.S. real estate isn't the only opportunity Steve sees today. He also believes we're in the early stages of an extraordinary financial event that could push the Dow all the way to 50,000. Learn how to maximize your profits from "the last bull market" right here.

Source: DailyWealth

The Fall in Oil Prices Is Only Beginning

 
Two weeks ago, I told subscribers of my high-priced True Wealth Systems service to bet against oil…
 
Subscribers are already up double digits. But the fall in oil prices is just beginning…
 
Why did we bet against oil?
 
Last month, bullish bets on oil hit their highest level in history. It was the popular trade.
 
But a popular trade is often a crowded trade – one that's nearing a top. That's because when everyone who wants to buy is already in, no one is left to push prices any higher.
 
So instead of being fashionable and joining the crowd, whenever I see an extreme like that, I like to do the opposite.
 
We can see today's sentiment extreme most clearly in the Commitment of Traders (COT) report…
 
The COT report tells us what futures traders are doing with their money. And it's a fantastic contrarian indicator when it hits extreme levels.
 
Last month, it showed futures traders were more bullish on oil prices than any other time in history. And prices are down since then.
 
Bullish bets have come down a bit as well. But as you can see from the blue line on the chart below, folks still haven't given up on oil…
 
What does this mean going forward? To find out, let's take a look at the last two times traders were this committed to higher oil prices…
 
Bullish COT bets on oil last peaked in mid-2014. You know what happened next… Oil prices crashed by 50% over the next six months. And they ended up falling 75% to their bottom last year.
 
Let's look further back…
 
In 2011, the oil COT broke out to a then-all-time high. Bullish bets peaked just before oil prices did. Oil rose for another two months… then crashed 30% in five months.
 
In short, it's dangerous to bet on higher oil prices after a bullish extreme in the COT.
 
Recently, the COT broke out above its 2014 high… It hit a new all-time high in December and has climbed consistently since then.
 
This is NOT a good sign for oil prices. It tells me that oil is a crowded trade.
 
It's hard to know exactly how far prices could fall based on sentiment alone. In 2014, similar sentiment led to 75% declines… But in 2011, oil prices "only" fell 30%.
 
Oil is already down 13% from its recent peak. And I wouldn't be surprised to see oil fall another 15%-20% from here.
 
That means the smart bet today is still on lower oil prices.
 
Good investing,
 
Steve
 
P.S. My True Wealth Systems subscribers are already up double digits in two weeks from betting against oil. I can't give away the exact details of how my readers are profiting today… But I can tell you it's a special way to bet on falling oil prices, with 30%-plus upside. It doesn't require futures, options, or anything like that. And you can make the trade in any brokerage account. You can learn more about True Wealth Systems, and how to access this oil trade, by clicking here.

Source: DailyWealth

72 Winning Trades in a Row… Here's How

Steve's note: Today, my colleague Dave Eifrig is hosting a free training webinar on how to collect thousands of dollars of extra income per month. Below, he explains what makes this unconventional approach to the options market so successful… and how it can help you profit in any type of market.
 
We just closed out our 72nd consecutive winning position…
 
I know that claim – 72 wins in a row – sounds far-fetched… But it's exactly what we've achieved in my trading advisory, Retirement Trader.
 
Not only that, but since 2010, we have been able to close 335 winners out of 356 total closed positions (a 94.1% win rate)…
 
All thanks to an unconventional approach to the options market.
 
In Retirement Trader, we sell stock options – we sell puts or covered calls. If you're not familiar with this idea, I urge you to learn more about it. You can read more here and here.
 
You see, lots of folks who sell options are focusing on the wrong ideas… And they'd find a lot more success if they followed my "common sense" strategy…
 
When most people buy or sell stock options, they focus on what the Volatility Index (the "VIX") is doing. The VIX is a widely followed indicator that measures the price of options on the broad market. It rises and falls with investor fear levels.
 
To see some examples of VIX behavior, check out the six-year VIX chart below. As you can see, the VIX spiked during the 2008 credit crisis. It spiked during the 2010 "Flash Crash." It spiked during the 2011 European debt scare.
 
When the VIX is low, options are considered cheap. When the VIX is high, options are considered expensive. So lots of folks wait to see the VIX hit an elevated level before they sell options.
 
But that's not what we do in Retirement Trader. Our unconventional approach doesn't require a high VIX level to make great money. In fact, most of our money has been made when the VIX was at historically low levels.
 
That's because our approach is based FAR MORE on great companies trading at cheap prices. Instead of focusing on what "the market" is doing, we focus on trading great companies like Coca-Cola (KO), McDonald's (MCD), and Wal-Mart (WMT). These companies have great brand names, stable sales growth, and they pay steady dividends.
 
Why is focusing on great companies so important? Why has it allowed us to produce such an incredible track record?
 
It's just basic common sense…
 
Great companies like Coke and McDonald's are much more stable than "hot tip" companies. They don't represent all-or-nothing bets on a specific drug… or a specific natural resource deposit.
 
For example, I doubt a new technology will come along and make enjoying a soda obsolete. And I doubt some new technology will come along and make cheeseburgers a thing of the past.
 
By focusing on companies that dominate their industries, our option trades are much more reliable than almost any kind of option trade you can imagine. By trading options around these companies, we're able to leverage our gains… but still enjoy a tremendous level of safety.
 
The VIX has spent the past several months below the 20 level. For a lot of folks, that means there aren't great opportunities to sell options right now. But in Retirement Trader, we've made dozens of trades on blue-chip companies like Coke and McDonald's. So far, we're averaging 16.4% annualized returns.
 
If you've been trading options for a while and you're not enjoying the success you'd like, consider focusing your trading on blue-chip stocks. Consider selling options on them.
 
The VIX will always rise and fall… But blue-chip stocks will remain stable. Trading on their brand names and stability with options has allowed us to profit on 72 consecutive closed positions. It could produce the same success for you.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Today, Dave is hosting a free webinar on his unconventional option-selling technique at 1 p.m. Eastern time. He'll explain how the strategy he learned on Wall Street could safely double or triple your nest egg in a few years… And he'll walk you through a real trade you can start collecting income on right away. Click here to tune in.

Source: DailyWealth

How Retirees Can Make 15%-20% Yields… Right Now

Steve's note: Yesterday, my colleague Dave Eifrig explained the little-understood benefits of selling options. Today, he'll share a simple way to put this strategy into practice. By selling options on a certain type of stock, you can quadruple the amount of income you collect – without taking on additional risk…
 
Today, investors have an incredible opportunity to earn double-digit percentage rates of income.
 
You simply have to look past conventional investments like bonds and mutual funds…
 
Instead, look at unusual income plans like "Digital Utilities." As I'll show you today, this plan is paying out safe income streams of 15% or more…
 
Traditional utility stocks have been a good friend to retirees and other income investors for generations.
 
You see, if you want indoor plumbing or a refrigerator, you have to do business with the municipal utility company. In many cities, these utility companies enjoy monopoly positions. The government-guaranteed profits turn these companies into income-producing machines. Because everyone has to use their services, the payments they deliver to shareholders are secure and safe.
 
These traditional utilities still have a place in the average retiree's portfolio. But as longtime DailyWealth readers know, there's an alternative type of utility company you should consider…
 
These stocks are safe. They enjoy near-monopoly positions. And if you're willing to try something a little different, you can collect annual income payments nearly four times as large as what you'll get with traditional utilities.
 
Let me explain…
 
"Digital Utilities" is the name I've given to certain dominant "Big Tech" companies. I'm talking about names like Intel (INTC) and Microsoft (MSFT).
 
Intel dominates the semiconductor industry. Microsoft dominates the software industry. Just like you can't turn the light on without using power from your electrical utility, you can hardly use a computer without using these companies' products. And because digital-utility companies don't have to contend with nearly as much regulation as traditional utilities, they can grow their profits much faster.
 
Now here's the part where it gets interesting…
 
Just like regular utilities, digital utilities pay reliable dividends in the 3%-4% range. But right now, you have an opportunity to quadruple the amount of income you collect from these stocks… without taking on any additional risk.
 
That opportunity is selling "covered calls."
 
In general terms, this strategy amounts to buying shares of safe, dividend-paying companies, like Intel and Microsoft, then selling "call options" to other traders. When you sell a call option, you're giving other traders the right to buy your shares at a certain price.
 
The process is different from just buying shares. And it takes a little while to get used to the idea. But I've shown thousands of readers how to do it in my Retirement Trader advisory. Once you get the hang of it, it will change the way you see income investing.
 
Let me walk you through some numbers, so you can see how useful a tool this is if you're looking for safe income…
 
Right now, you can buy Microsoft for about $65 per share. Let's say you buy 100 shares, for a total of $6,500. Right after buying your shares, you can sell someone the right – but not the obligation – to buy them from you for $67.50 each ($6,750 total) any time between now and late May. You collect $100 for selling that right. This $100 payment represents an instant 1.5% yield on your shares.
 
If Microsoft climbs above $67.50 in May, you'll sell your shares for a capital gain of $2.50 per share… keep the instant 1.5% yield… and pocket the quarterly dividend Microsoft pays along the way. All told, you'll walk away with 5.4% in two months – more than 30% annualized.
 
If Microsoft does not rise to $67.50 per share, you simply keep that instant 1.5% yield, your 100 shares, and the dividend. You can continue to collect those dividends. And you can make similar trades over and over again, generating a double-digit annual cash yield.
 
Readers of my Retirement Trader options-trading service have been able to do just that… They've been able to turn a safe "utility" stock into 15% a year or more in income.
 
That's about four times what you can collect by simply owning shares.
 
Don't get me wrong… Regular shareholders of traditional utility stocks and "digital utility" stocks like Intel and Microsoft will do just fine over the coming years. Both investments will pay out reliable dividends.
 
But folks who are willing to do a bit more work can start earning 15%-20% a year right now.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Tomorrow at 1 p.m. Eastern time, Dave is releasing a free, online training event where you'll learn more secrets to safely boosting your income through options. He'll even walk you through a real-life trade you can put on immediately, so you can start generating income right away. Click here to save your seat.

Source: DailyWealth