Japan continues to rally as it breaks out to new 29-year highs.
And just think, the Japanese Nikkei225 can rip another 40% from here and still not get back to its highs from the late 1980s. That's how long it takes a bubble of that magnitude to correct itself.
Let's remember, at its peak in 1989, the real estate value of just one single park in Tokyo was worth more than all of the real estate in the state of California combined. I've been to that park. It's ok I guess. But not worth more than all of Cali, quite obviously.
So here's what that Nikkei chart looks like today:
We retired our "Five Bull Market Barometers" in mid-July to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
This year has been fantastic for one sector in particular, and that is the Pharma sector. Stocks that had been in a secular bear move, reversed their trend late last year and have been trading higher since.
Let’s see if there are any opportunities in the current set-up as the sector prepares for its next leg higher (along with IT).
During bull markets I always get asked about when it's going to stop. I don't get asked about stock market bubbles and unsustainable valuations during bear markets, that's for sure. Those environments come with other kinds of funny questions.
This morning I woke up to one of my college buddies telling me that tech valuations are too high and that this has to be a bubble.
Journalists ask me every day how this can possibly continue. "Too high", they say. "Too fast", they tell me. "Fed Printing", they claim. "It's only 5 stocks!!!"... I can't.
Anyway, maybe this is the top. Maybe we are about to crash. Maybe valuations are too high....
But there's no evidence at all that this is the top. New All-time highs are not characteristic of downtrends. They are things we see regularly in uptrends. In fact, new highs are perfectly normal, and should even be expected in this type of environment.
2008-2009 was a dark period for the banking industry. The "Financial Crisis" nearly brought the whole system to its knees. Stocks in household name banks became penny stocks (Citibank!), Warren Buffet had to rescue Goldman Sachs, and a few had to put themselves up for sale (Merrill Lynch), or even became extinct (Bear Stearns, Lehman Brothers).
For some long-term investors (and former employees in this sector), this is still a fresh wound.
But charts in this sector are starting to tell a different story.
It's always hard for us market nerds to level with others who don't share our obsession for Finance.
And that's important because, with all the noise of today, I think there's a very real barrier to finding sound information. While I'm by no means an authority on this subject (in fact quite the opposite), whenever I talk to people about Finance, I always hear two complaints.
Dividend aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to longer-term minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That’s why we're turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for 5-9 years.
Introducing the Young Aristocrats. We like to say these are "stocks that pay you to make money". Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
Few things take the mind on a flight of fancy like the thought of interstellar space travel. Who hasn't taken a look at the night sky and wondered what's up there?
Richard Branson took a look and wondered the same thing. Only, he decided to try to make it happen. Enter: Virgin Galactic, a company looking to open up space for recreational travel.
Investors seem to be willing to bet along with Sir Branson that humanity with believe space travel is a worthwhile exploration. This chart here shows $SPCE on the verge of emerging from a 10-month base. And as JC often says: "The bigger the base, the higher in space!" And that couldn't me more appropriate than here.
I don't want to keep talking about the same asset, you guys know we pride ourselves in looking for opportunities all over the world and across asset classes. But this Bitcoin scenario right now presents us with the perfect opportunity to explain what overwhelming amount of supply looks like. So bear with me, no pun intended (ok maybe a little).
Our upside objectives in Gold and Bitcoin were both hit recently. They were the former highs from 2011 and 2017, respectively. We discussed this in our Greater Fool discussion.
But WHY were those our targets? WHY were we, and still are, so focused on those former highs?
The reason is because it is a FACT, that last time Bitcoin was up here just under 20,000 there was more selling pressure than buying pressure. There was more supply than demand. This isn't like "JC's Opinion", or the opinion of my team. These are just facts. Bull or bear, bitcoin cult leader or not, you can't disagree there. Last time prices were up here, they fell. And they fell hard.
