Trading in This Bull***t Overpriced Market…

Trading in This Bull***t Overpriced Market…


Trading in This Bull***t Overpriced Market… — with David Moadel hey everybody welcome to looking at the
markets with David Modell this stock market that we’ve got I’m talking about
the American stock market it is overvalued it is expensive if anybody
doesn’t believe that this stock market is overvalued over bought expensive
whatever you want to call it watch this video from beginning to end please I am
NOT being paid to make this video this is not sponsored this is just important
information that I want everybody to know and at the towards the end of the
video I’m gonna give some thoughts on how do you trade or invest in a market
like this because people ask me you know should I short this market should I load
up on put options or short sell the sp500 that kind of thing and that
probably is not the best way to go we’ll talk about that towards the end of this
video but anyway and if there’s anybody out there if any of your friends or
family members thinks that this is not an expensive overpriced market please
show them this video because I don’t want anybody to take their retirement
savings and throw it all into this market I mean let’s start with if you
had to pick one stock that represents this market I think Apple would be as
good a choice as any I mean look at the S&P 500 which stock has the greatest
market in terms of market cap which stock has the greatest share of the
sp500 it is Apple it has been Apple for a while now and look at Apple look at
the angle on this thing now this is a daily candlestick chart from trading
view calm my goodness I mean as soon as you think it’s done it just keeps going
and going not just green candles but look at it if you can see it I know it’s
small look at the size of these green candles I mean it just keeps on
relentlessly going up and not just going up but the angle at which it’s going up
is just insanity and you might think well hey this is justified it’s Apple I
mean hey great company right people don’t mind paying $1000 or more I think
it’s more now for an iPhone I I don’t have $1,000 iPhone I wouldn’t pay that
much for it so it must be justified right well let’s take a
look ok this is the price of Apple there’s the the price of the stock and
here is the earnings per share this is how much money they’re making per share
EPS stock price going up earnings per share going down so it’s not justified
in my opinion okay this is what it’s really worth and if even that much and
again nothing against the company ok I know a lot of people love their Apple
products that’s cool that doesn’t mean you have to buy the stock all right I
mean look at the RSI on Apple okay this is not just I mean if 70 is considered
overbought or too expensive on the RSI for a stock we’re looking at between 88
and 89 here on the RSI on the relative strength index I’m not saying that this
is a perfect indicator it can keep going up up of course but it hasn’t been this
extreme since Oh way back here okay you have to go back literally 15 years to
find it this overbought and the stock price lost almost a fourth okay 24
percent the last time this happened doesn’t guarantee that’s going to happen
again anything like that but my goodness it could it could keep going up but and
it’s not just Apple I’m not just going to blame Apple you know or pick on Apple
it’s the stock market I mean you know we saw the we saw the divergence here
between the intrinsic value in terms of you know revenues or earnings and the
stock price I mean you could take the Dow Jones here’s the Dow Jones the EPS
earnings forward earnings and here’s the the Dow price the stock prices of the
biggest companies including Apple by the way the biggest companies on the
American stock market all right divert divergence is what that’s called
and you know it doesn’t mean that the price
is going to come down tomorrow or the day after but eventually as you can see
the two lines always meet at some point sometimes it takes a while all right so
this is long term thinking and who is buying all of this well I’ll tell you
what since our because of Robin Hood and they
started the trend of zero Commission trading and you can trade from your
phone with just an app now a lot more retail or beginner traders are in people
who have no business being in the stock market are buying stocks and so who is
invested who was loaded up on stocks right now who pushed the stock market up
so much well we can partially blame the retails and I hate to call them this but
they’re the dumb money that’s not very nice okay I just don’t want you to be
the dumb money is all I’m saying okay I don’t mean to insult anybody okay so if
you look at the US household equity allocation this is not hedge funds this
is not CEOs these are not people actually on the inside these are people
on the outside looking in and grabbing their apps and getting there
you know Commission free trading which a lot of brokers offer nowadays it’s not
just Robin to it anymore so everybody’s getting in households are buying it up
and that’s this is the red line this is households buying okay and what happens
after that well the real returns over the next
decade not just the next year the next decade are substandard after this
happens typically after everybody gets in okay there’s that old saying when
your cab driver nowadays I guess it would be your uber driver so I’ll put it
in modern terms when your driver is giving you stock tips it’s time to get
the heck out that’s an old saying from back in the Great Depression days and
you know you got cab drivers and uber drivers all invested and thinking that
it’s easy to make money in the stock market I don’t I don’t like this all
right again smart smart money versus dumb money not to insult anybody
consumer confidence versus CEO confidence consumer confidence way up
CEO confidence who’s right well whose actually who
actually has data who actually sees the day-to-day operations at the top levels
is it the consumer the people buying iPhones for a thousand or eleven hundred
twelve hundred dollars or the people actually heading the company’s you know
which one’s the smart money which one’s the dumb money here is the Bloomberg us
weekly consumer comfort index way way way up and by the way the S&P 500 is
also of course way way up notice the correlation here okay what happened the
last time consumers were this comfortable and this complacent and
thinking everything must be fantastic well the last time this happened was
right before the tech bubble burst back in the year 2000 or so 2000 2001 I’m not
saying that tomorrow the stock market’s going to crash I’m saying that consumers
are supremely and extremely confident who is the dumb money who’s the smart
money short interest on the S&P 500 or the spy which is the sp500 ETF tracking
ETF yeah nobody is short the S&P 500 right now
I’m not telling you to short the sp500 I’m just saying that almost nobody is
it’s okay this is the SP 500 this is the short interest it is way way way down
here yeah the lowest it’s been in a long time I could this go even lower sure but
which side do you want to be on do you want to be with the crowd and doing what
everybody else is doing or do you want to be a contrarian that’s a decision a
personal decision that you have to make again we talked about the divergence
between you know what company’s intrinsic value really is how much money
they’re actually making versus stocks this is a chart showing the share of the
top five companies in the S&P 500 okay what are those Apple Microsoft Google
Amazon Facebook you could have guessed a lot of tech stocks in there by the way
you know when there’s not a lot of market breadth that means that a few
tech stocks are leading everything and pulling all the weight here
so there’s not not enough market breath in my opinion so you’ve got the top five
companies that are pulling practically all the weight in the S people I’ve had
S&P 500 up up up and the actual income of those five five companies going down
divergence last time that happened right before 2000 we all know what happened
then when tech stocks were you know it’s not as extreme as you might recall in
2000 you know yeah pets.com companies like that that we’re not making a whole
lot of money but the stock price just shut up exponentially is it that extreme
well we don’t have a tech bubble so much we may have other bubbles going on
but in this case we do have a concerning unsettling divergence here and you can’t
tell me well it’s all justified by GDP growth right I mean we’re a really
productive country right now well look at long term nominal GDP growth down
down down so this is a downward trend in how much this country the United States
is producing how much are we actually you know creating here in terms of value
it’s not enough it’s not on a good trajectory looking again at the GDP in
the United States equity market cap in other words stock price is divided by
GDP how much we’re actually producing as a country
well when stock market prices just keep marching upwards relentlessly and how
much the country is actually producing well again happened right before the
2000 crash and it’s even more extreme now stock prices way way up productivity
not up and here’s another way of looking at this aggregated US equity futures
positions in other words the stock market or as reflected in the futures
way way up and is M okay that is a measure of the manufacturing sector okay
Institute of Supply Management by the way in case you’re wondering what that
stands for and when shipping and manufacturing
specifically and transports those are the three I tend to look
at all so the copper price they call it dr. copper is another indicator but if
you want a pretty good indicator of how we’re doing has a nation in terms of the
real economy the is M is a pretty decent indicator okay when you don’t you don’t
have strong robust manufacturing that’s not a great economy I don’t care if
other pieces are in place you got to have that really if you want the full
picture its way down meanwhile stock price is way up divergence here I don’t
like it and this is unsettling to me this concerns me when the market value
when the market cap of Tesla is higher it just went a little bit higher then
the market cap of Ford and General Motors combined combined Tesla has only
been around since 2003 so I’m assuming that if you’re watching this you’re
probably older than Tesla most of you some of you a lot older than Tesla I
know I am and meanwhile Ford how long has Ford been around how long
is General Motors been around generations and generations when a
relative newcomer and a much smaller company has a higher market cap than
Ford and General Motors combined that is not a good sign things are out of whack
things are skewed something’s not right I’m not blaming Tesla in particular I’m
just saying this is a sign of the times when you have IPO mania I know I know
Tesla’s not or not is not a recent IPO anymore but when you have IPO mania when
new companies are worth more than companies that have been around for a
long long time and survived multiple recessions a recessionary type of
situations something’s out of whack all right do I recommend shorting the
markets not right now okay I’m not saying buy a lot of stuff but as long as
the federal reserve keeps buying and buying and buying Treasuries that means
bonds when they keep flooding the banking system with dollars by buying
bonds I know that Jerome Powell the Fed Chairman says this is not QE this looks
and sounds and talks and walks like QE though of course it’s a huge bond buying
program as long as they’re still able to do that at the rate that they are I do
not recommend shorting this market okay because you’re fighting the Fed I’m not
telling you to fight the Fed just a little bit more before I get into what I
would recommend so I just told you what I do not recommend and why all right and
this is from the Daly coin org this is a great article I want to give him credit
I’ll put a link in this I’ll put a link to this in the description of this video
12 signs that the economy is seriously slowing down right now okay
as some of these we pretty much went over the US manufacturing Purchasing
Managers Index has been in contraction for five months in a row lowest level
since June of 2009 do you remember what happened that year hmm last month
manufacturing employment fell at the fastest pace we’ve seen since August
2009 we all know what happened in 2009 last month new manufacturing orders fell
to fast pace since April 2009 Chicago Purchasing Managers Index again this is
all manufacturing indicators been contracting for four months in a row
going around the world a little bit here European manufacturing PMI declined
again in December you might be old enough to remember how you know this
company’s been around for a long time Borden you know they made the milk right
dairy they just declared bankruptcy that’s not good the Baltic Dry Index
I’ll add that to you know the PMI and the is m and you know that’s another
good index that I’m not not enough people look at had its worst day in six
years overall the decline in the Baltic Dry
Index this month is the largest that we’ve seen since 2008 we all know what
happened then the autumn automotive sector we we need that for a really
healthy economy that’s a piece of the puzzle and it’s getting worse
due to this substan to these substantial slowdown we witnessed during the second
half of 2019 the total number of cars and trucks sold in the US during all of
2019 was actually below the level we witnessed back in 2000
back when the population which was much smaller that’s not good when people you
know can’t afford to buy cars you know meanwhile the consumer is confident but
data they can’t even afford to buy a car you know that’s not a good sign used
heavy-duty truck prices have fallen as much as 50% Macy’s R is closing more
stores I know Macy’s is not really an indicator of the overall economy a lot
of those sales went to Amazon I get it but you can add this to the list and to
the start of the year 18 T is laying off thousands of workers according to Robert
Reich those being laid off will have to train their foreign replacements
outsourcing going on you think that’s healthy for the economy
maybe someone else’s economy not for the United States so but meanwhile you know
market just keeps going up and it’s due to a few tech stocks five of them we
named them and you know maybe a few others so what do you do about it
well you look for the bargains I mean I’m putting out videos every once in a
while I put out you know stocks on sale buy low sell high I try to pinpoint the
stocks that have gone down but still have good business models or maybe
they’ve gone down and it’s just in it was just an overreaction so you have to
try to find bargains there aren’t many every weekend I’ve been putting out for
a long time been putting out you know the stock chart stock charts of the week
that I’m looking at so I try to point out which ones might at least be
attractive at least some of them so you got to be a stock picker in my opinion I
mean you don’t have to do anything you’re gonna make the final decision not
me as to what you want to do but you know I’m a stock picker right now I’m
not just buying the whole thing and you want to diversify how many times have I
talked about gold and silver as as good or great I should say diversification
you know vehicles if you want to take a very small position in Bitcoin I respect
that if you want to invest in you know other countries think outside the box
not everything has to be in an American centered investment so
find fine bargains somewhere wherever you can and I’m gonna keep outputting
keep on putting out videos I’ve got a couple of sponsored videos coming up
fairly soon gonna try to point out some bargains or undervalued under-the-radar
type of investments out there that that you know you should take seriously and
you should look at make your own decisions do your own due diligence do
your research look for charts like these let me know what you find
comment or I hit feel free to leave a comment in this video all right but I’m
not promoting anything in this video at all I just want to get this out there
show this to your friends warn them let them know that you know this might not
be the time to go all-in on anything alright thank you for watching and
listening stay safe folks I’ll talk to you soon

33 Comments

  • Ryan Giffin

    January 14, 2020

    Lol awesome title. Some caution needs to be deployed at these levels. I think we will take a leg down at some point but I have been calling for a market bubble rather than the crash everyone was predicting for 2020. If we are in a bubble it’s early in my opinion.

    Reply
  • done done

    January 14, 2020

    people have lost their minds , as Jim Rogers would say " this is gonna be the worst economic collapse in my lifetine".

    Reply
  • StarFlame Dia

    January 14, 2020

    Awesome video, thanks! In my opinion the current insanity at the market is not only due to the tremendous increase of retail traders but also due to political reasons.

    Reply
  • Gregg Buffalo

    January 14, 2020

    Nicely done. An old saying paraphrasing. "When it looks to good to be true, it probably isn't" Thx for dose of reality.

    Reply
  • Moe

    January 14, 2020

    If the Fed continues bond buying indefinitely it would be tough for the U.S. stock market to go down. I don't see that slowing down otherwise rates would go up and that may spill over to the corporate bond market. There may be negative interest rates coming soon.

    Reply
  • Chad Bennington

    January 14, 2020

    I am waiting for the market to crash so I can make that bread baby💲💲💲💲💲💲💲💲💲💲💲

    Reply
  • Tobin Phillips

    January 14, 2020

    The dumb money doesn't watch your channel or care about divergences. Man up and buy the dip Moadel (If we ever get one)

    Reply
  • Ron D

    January 14, 2020

    I think the difference between Tesla being out front of GM and Ford is that Tesla is much more than a car company. It's more of a tech company that also builds cars.

    Reply
  • Janice LuvsStarbux

    January 14, 2020

    "Just insanity," you say…I couldn't agree more. Love the title of this one too David. I know this took a lot of work to produce. I shared it w a relative to back up my stance. Thank you.

    Reply
  • ANTHONY Jr.

    January 14, 2020

    bought 3 spy 328 puts for Friday, I'm thinking china deal or a missed earnings report will drop the market

    Reply
  • Monster Electric

    January 14, 2020

    Great presentation. Thank you.

    Reply
  • AC 2014

    January 14, 2020

    If you trade this market using fundamentals then you will never make money. Fed backs this market up with low interest rate and repo. Stocks only can go higher…. All dips are bought… We will never ever have a crash again….buy buy buy… Aaple is 400 soon… Tsla can go 1000

    Reply
  • Rocky Always Learning

    January 14, 2020

    Tks for video

    Reply
  • 49wendyg

    January 14, 2020

    Sad state it is in the market right now. Even oil is 50 % over value. Good time to increase your investments in real gold, silver and bitcoin. 🙂

    Reply
  • COMPOUND-INTEREST STOCKGUY!

    January 14, 2020

    FEDS just gonna Keep BUYing haha. But its gonna Drop hard sometime soon, but theyll push it up Higher Leading into Elections, wouldnt Surprise me if we See $400-500 APPLE Easily Before 2020 ends. No pos. " The market can Stay Irrational, longer than you can stay Solvent". Why no Smart Investors are SHORTING APPLE hard atm.

    Reply
  • I Am Who I Am

    January 14, 2020

    If a market crash happens I want it to happen after the election. I want President Trump to get reelected and having a strong market will ensure his success. If a Democrat gets elected, we are doomed.

    Reply
  • Email2

    January 14, 2020

    Hey Dave how are you doin lately…I had calls on spy today and saw what happened afterhours and thought…im gonna utube dave and get his opinion…the markets are propped arent they….I also have witnessed to my dissapointment… where every practice trade and real money trade i took in the last few weeks on momo morning stocks…ie maxar snap and flexion..would get sold off the next day..and then it was anybodys guess if sentiment would save them and put them back on track…but I see big money taking profits early on a consistant level

    Reply
  • Electricos Cosmos

    January 14, 2020

    You mean you don’t like buying stocks at 90 P/E? Perhaps some NFLX at 108 P/E?

    Reply
  • Electricos Cosmos

    January 14, 2020

    AAPL and TSLA monthly candles almost entirely outside of top Bollinger Band. Lol…. insanity, that federal reserve causing boom and bust cycles since inception.

    Reply
  • Liberty

    January 14, 2020

    This is a parabolic market, which is completely disconnected from the true value of the economy. Excellent video. Thank you!

    Reply
  • Max Hanna

    January 14, 2020

    your talk make sense to me …. thank you for your deeper look.

    Reply
  • JK

    January 14, 2020

    "Never going down again" 1929

    Reply
  • Aussie Mick

    January 14, 2020

    Change your strategies and adapt. Plenty more dumb money out there due to low interest returns from the banks. As traders our job is to take that money.

    Reply
  • Ggug Fujh

    January 14, 2020

    Thanks David

    Reply
  • Graham Taylor

    January 14, 2020

    Nice One David.very informative andvfalm like the.majority of your work. Will always continue to watch and learn from you.thankyou for all your effort.

    Reply
  • Camilo Castiblanco

    January 14, 2020

    Is VIX being shorted ?? Looks green and strong the last few days, today maybe red day finally and hopefully

    Reply
  • The Dividend Project

    January 14, 2020

    Yep, bumping into record highs one a week it seems. Thanks, David!

    Reply
  • jayroyce2002

    January 14, 2020

    Don't be silly. There's enough Kool-aide for everyone. How can there be that many investors out there that don't remember the .com bust or even 2009?

    Reply
  • Bill W

    January 14, 2020

    Where is the chiquita in the black dress ?
    To answer your question, we are not in the market, nobody should be, its a game of musical chairs.

    Reply
  • Jay Stenger

    January 14, 2020

    Great information David , siting in cash till we see correction.

    Reply
  • Jay Stenger

    January 14, 2020

    Great information David , siting in cash till we see correction.

    Reply
  • jj jz

    January 14, 2020

    I’ve been short since the beginning of the year but I’m patient. For how long who knows. It just keeps going up

    Reply
  • Terry Lee

    January 16, 2020

    Just subscribed
    Thank you for great insight

    Reply

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