Climaxes

Sometimes, a climax is a good thing in life. For example, climbing Mt. Everest is exhilarating. It’s the climax.

I will never know. Doesn’t interest me.

In other parts of life…climaxes are…pleasurable.

Not so much pleasure with a climax occurring in the stock market these days.

There are buying climaxes in the market—many of them. Take a look at this chart.

A buying climax occurs when a stock reaches a 12-month high but closes the week with a loss. These are signs of distribution and indicate that stocks are moving from strong hands to weak ones.

Selling climaxes occur when a stock makes a new 12-month low but then closes the week with a gain. They are a sign of accumulation and indicate that stocks are passing from weak hands to strong ones.

Based on historical data from Investors Intelligence, sellers into buying climaxes and buyers into selling climaxes are right about 80% of the time after four months.

What does this all mean?

Let’s start with what the climaxes do not mean.

The climaxes do not mean the market is going to crash.

The climaxes also do not mean that the market will sell off.

The climaxes mean that the market rally is not as healthy at this stage, mainly when it's this long in the tooth. We want to see lots of stocks participating as the market goes higher.

That’s not happening. We should be on alert!

The climaxes are also a pre-warning. They warn you ahead of time by about four months and often correctly identify changes in risk before the next guy knows.

Do you want to be in the know or do you want to be the next guy?

That’s why I am pointing this out to you. Now.

The climaxes are another data point that suggests risks are elevated.

Meanwhile, the trend is still up.

Therefore, the market will trend higher until it doesn't. However, the risk is elevated, so while I am not waking up in the middle of the night all hot and bothered about a crash, I am not excited to buy stocks hand over fist either.

That said, on a scale of 1 to 10, I'd rate this indicator an 8. It's based on buying and selling pressure, but more importantly, it's based on price.

Price. Not opinion.

Prices are hitting new highs only to close lower. That’s a fact, not an opinion. In addition, the number of buying climaxes just surged (red line on the chart above). So it sticks out like a sore thumb.

The situation will resolve itself. We simply need to be prepared so that we can act!

Do not get complacent!

Ignore risk at your own…risk!

My dad gave me the best advice. He always told me, "Stick to what you know, kid."

The context is don't get good at something and build a career but then do something you don't know much about, like owning a restaurant so you can drink the liquor for free and sleep with the waitresses.

Do one thing well.

One thing I know is reading financial statements. I can say I'm somewhere inside the top 0.001% in identifying risk, and I've been doing this for a long time.

That said, even if I identify risks or lack thereof, it doesn't mean the stock will do what it should be based on those risks. Sometimes, the stocks of great companies go down, and vice versa.

But, often enough, they react the way they should.

Which led me to the best advice my Mom had given me. She always told me to "shit or get off the pot."

So it's that time. The good folks at Dent have made my Forensic Accounting Stock Tracker™ (FAST) and F.A.S.T. Profits more broadly available.

Here’s the eight stock portfolio since I created FAST in 2010:

And, until December 3rd, not only is the price discounted, but you also get full access to all 1,500 stocks. That deal goes away on December 4th. Want the same tools that billion-dollar investment funds paid me $25,000+ for?

For $1.36 a day?

Well, then, all you have to do is act.

You can read all about it at the link below.

​FAST Profits | HSD Publishing​

​

Got a question or comment? You can contact us at info@hsdent.com.

DISCLAIMER:

THIS COMMUNICATION IS FOR EDUCATIONAL AND INFORMATION PURPOSES AND DOES NOT CONSTITUTE INVESTMENT ADVICE. Any Publishing Service offered by HSD Publishing is for educational and informational purposes only and should NOT be construed as a securities-related offer of solicitation or be relied upon as personalized investment advice. HSD Publishing strongly recommends that you consult a licensed or registered professional before making any investment decision.

THE RESULTS PRESENTED ARE NOT TYPICAL OR VERIFIED. HSD Publishing has not verified information regarding the historical trading performance presented. Subscribers' trading results have NOT been tracked or verified, past performance is not necessarily indicative of future results, and the results presented in this communication are NOT TYPICAL. Actual results will vary widely given various factors, such as experience, skill, risk mitigation practices, market dynamics, and the amount of capital deployed. Investing in securities is speculative and carries a high risk; you may lose some, all, or possibly more than your original investment.

HS DENT IS NOT AN INVESTMENT ADVISOR NOR A REGISTERED BROKER. Neither HSD Publishing nor its owners or employees is registered as a securities broker-dealer, broker, investment advisor (IA), or I.A. representative with the U.S. Securities and Exchange Commission, state securities or regulatory authority, or self-regulatory organization.

WE MAY HOLD THE SECURITIES DISCUSSED. HSD Publishing has not been paid directly or indirectly by the issuer of any security mentioned in the Services. However, HS Dent, its owners, and its employees may purchase, sell, or hold long or short positions in securities of the companies mentioned in this and future communications.

John Del Vecchio is not an employee or partner of HSD Publishing. HSD Publishing serves solely as the marketing arm for John Del Vecchio and Unbounded Wealth: Max Profits.

© 2024 HSD PUBLISHING. ALL RIGHTS RESERVED. 15016 Mountain Creek Trail Frisco, TX 75035.