Did U.S. stocks just lose their leadership position?

Your goal is to head north. I’m telling you this and not suggesting it.

So you go to the bus station and you see three bus routes: North, South and Around-Town.

The southbound bus has a party taking place on it. People are laughing. Drinking. Dancing and having a great time. I mean they are really have a good time and they want you to join them. It’s been awhile and you’ve been wanting to have fun. And then you notice there are people on that bus that you respect… so you are attempted because seeing “them” makes you think it might be okay.

The Around-Town bus is equally fun and inviting. Plus the seats are comfy and the bus has 5G wifi! And this bus too has people you respect on it already. And so the pull towards this bus is also strong.

And then there’s the northbound bus.

The bus can get you to where you want to go. But this bus doesn’t have wifi or dancing or laughing or big comfy seats… In fact it’s kind of empty. And you don’t recognize the people.

Which bus do you get on?

I’m asking because you are being offered this choice every day. Most of you are getting daily invites to jump on the southbound bus or the Around-Town bus (these buses are operated by the pick of the month newsletter industry). Of course some of these bus could become northbound buses but most won’t.

So keep your eyes on the prize.

Because right now the prize is a bit muddled.

Below is a price chart of the United States stock market, the S&P500 w/dividends (NYSE:IVV). And as you can see there are three things going on in this price charts. So let me explain:

  1. The red shaded area represents the time period this northbound bus spent in town picking up passengers.
  2. The yellow shaded area represents the Northern edge of town with a clean view. And as you can see the price is up in this “almost out of the town” stage. And yet, the last time the price was here, it turned back into town.
  3. The four dashed lines represent the long(er) term price direction of the S&P, which are clearly up and to the right.

All things being equal the S&P is the northbound bus, AND we need one last confirmation for the bus to break up and out of the yellow shaded area.

Below looks at a completely different part of the world. Europe.

Below is a price chart of a MSCI Eurozone ETF (NYSE: EZU). Europe is not only not driving around town but looks lost south of it. In fact they aren’t even back to town (red shaded area) yet. Let alone emerging from the other side of it.

I notice three things about the price chart below:

  1. Europe is still far behind the US markets. One might even think the Eurozone ETF is acting like a lost southbound bus that is coming back to the station to pick up more passengers. Time will tell still.
  2. Will the Eurozone turn into a northbound bus? I don’t know but until it can back to town (red shaded area) and then to the almost out of town northern section (the yellow shaded area), I’m going to wait, even if the people on that bus seem to be having an exciting ride. Excitement is for amusement park patrons and not investors.
  3. The Eurozone has a lot of catching up to do.  Of course it can do it. But until that southbound bus starts acting differently I’m not sure its worth the potential loss. And yes, there will always be people that can claim to know which southbound buses will turn into northbound ones.

Below looks at a price chart presenting the MSCI Emerging Markets ETF (NYSE: EEM).

Like the Eurozone, Emerging Markets has been on the southbound bus for awhile. Exciting? Yes. Good for your money? Not Yet.

Things can change of course, but right now we’ve got Europe and Emerging Markets stabilizing but still having a lot of ground to make up. And as you can see Emerging Markets is attempting to break back into town (red shaded area).

So RC. What does a northbound bus look like?  

The bus below is one of those boring northbound buses that isn’t throwing a party. Doesn’t seem to have many dancers on it but still… its northbound. And though there isn’t 5G wifi, the bus is getting the job done. It’s getting people North.

And as you can see. The bus has already left the town (red shaded area). Cleared the “almost out of the town” area (yellow shaded area) and is clearly moving North.

That bus?

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It’s the utilities sector (see below). But RC what if this bus stops driving north? Fair question. We will get off it WHEN it stops heading north and not IF it stops heading north.

So please be careful what bus your money is boarding. And if you listen you can hear which bus your money is trying to tell you to get on.

Skip exciting. And simply go with what is already happening (read: northbound buses).

The good news is Fearless Wealth Research has a bus schedule.

You can learn very quickly what your money is trying to tell you by looking at the bus schedule (northbound only). Just scroll back up and look at the three bus routes (stock charts). Which one does your money want itself on?

By the way, money hates excitement. It love predictability. What’s predictable? Something continuing to do what it is already doing.

Could the Northbound bus change directions?

Of course. And they all do. But we also know from history certain buses have a higher probability of only wanting to travel North. And these buses can stay headed north way longer than humans can fathom.

If you’d like to learn more about bus schedules and eliminating the noise of news, hot-picks, TV, social media, politics and sound bites.

Then there might be a better way.

So choose wisely because it will determine how well you sleep. How long you work. And whose schedule you are living by.

In Your Corner,

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RC Peck, CFP

PS – Whenever you’re ready, there’s three things I can help you with…

  1. Do NOT lose half your money [again] in the upcoming recession.
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  2. Your portfolio has leaks… When will you get a second opinion? When was the last time you had a third-party person look over your portfolio and clearly point out to you where all the leaks are? You might be surprised how many there are. And no, I’m not talking about the obvious fees.

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