Stocks: Cautious Short-Term, Bullish Long-Term

You’re probably getting sick of hearing it, but my call for Dow 31,000 doesn’t seem so crazy anymore — in fact, it’s beginning to look like a conservative target. I’ve maintained my view that the Dow Jones Industrial Average would eventually hit 31,000 or higher over the next few years, possibly as soon as 2020.

In fact, since 2009, I’ve held steadfast that the U.S. equity markets have entered a bull market and that the Dow has huge upside potential going forward with the downside limited to mere technical corrections.

Why? It’s simple really; the most important economic and social/cultural SuperCycles are now converging again for the first time in more than 80 years.

Now factor in the war cycles, the upcoming sovereign debt crisis, and other geopolitical forces, like the looming collapse of the EU. And you can easily see why this generational convergence is driving massive amounts of capital into U.S. assets at a breakneck pace. Most of it is funneling straight into our stock markets — the most liquid on Earth — and it’s obvious why I’m so bullish.

Right now, this tsunami of social-economic change is striking mostly overseas, this next phase of the bull market is more about people getting really scared outside the U.S. and looking to park money somewhere safe.

There’s only one place in the world that has the liquidity, the safety, and the return that foreign investors want: Wall Street.

I remain extremely bullish long term on the U.S. stock markets, which is why my long-term target of Dow 31,000 may end up a conservative call … Dow 45,000 or even higher is a real possibility.

But no market moves straight up or down in one direction. Markets rise and fall just like the ebb and flow of the tides.

A pullback — even a very sharp one in our stock market — is way overdue.

Here’s why I remain cautious on stocks in the near-term and expect a temporary and healthy pullback:

  • Bullish sentiment is extremely high — usually peaks before a downturn.
  • Volatility remains low — The S&P’s 65-day rolling volatility is at a record low — this typically occurs ahead of a corrective phase.
  • The Dow is trading 2,000 points above its 200-day moving average and the S&P 500 is 8% above its 200-day — another sign of an extended and overbought stock market.

Plus, my AI models are still showing that a pullback is coming. As you can see from the chart, the Dow should head lower and bottom in late March.

The lower it can get, the better. For members of Supercycle Trader and Real Wealth Report, I’ll be looking for buying opportunities at these lower levels.

Now is NOT the time to jump in with both feet. But when the time is right, my members will be the first to know.

My team, myself and my Artificial Intelligence, neural net, deep machine learning models are on top of it.

Best wishes,

Larry

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Comments 13

  1. King Ralph February 27, 2017

    A bold timing prediction. Now we can track it.

    Reply

  2. Siggy Latarski February 27, 2017

    Larry, if in Precious Metals Fund, does it pay to sell on your down side comments & buy back in, or just let it ride at this point.

    Reply

  3. Doyle Hawks February 27, 2017

    I have mist the run up in the Dow so far.
    I am still waiting for the middle of March.
    The reason being is because on Dec. 16th of last
    year you told us the correction would come some where
    around the middle of March 2017.
    I hope you are right.
    If you are right I will jump in with both feet!!!
    If not I know I have mist a great opportunity by not being
    in the market today.
    I read both Real Wealth & Supercycle Trader.

    Reply

  4. Catherine Rawson February 27, 2017

    The graft given in your letter reminded me that it’s been a while since you updated the gold chart, and I was just wondering if you planned to give that soon. I’ve been a tad uneasy these past few days with the action of gold (very close to a downside movement over its 200 day MA), tho’ your chart of 1/13/17 shows it reaching a near term high of 1500 – 1650 (my guesstimate). Thank you for your faithful and expert guidance Catherine Rawson

    Reply

  5. frank February 27, 2017

    Larry , A note to remind you how much we all appreciate your regular messages and updates … They are great ‘security blankets’ in this volatile time . Thank you , Frank

    Reply

  6. Phil Issenberg February 27, 2017

    Hi Larry,
    I am not exactly sure why, but each time I am watching the K-Wave video, it goes for a period of time and then just stalls out. I really want to see it to completion. Have any thoughts suggestions??? It is not happening with other videos I am watching.
    Thank you
    Phil

    Reply

  7. Philip Krueger February 28, 2017

    Larry why haven’t we got a February report? waiting

    Reply

    • Chuck Burton March 1, 2017

      Feb RWR came out a week ago. You must have trashed it.

      Reply

  8. kiran February 28, 2017

    larry some people at Oxford club are saying that stock market are going DOWN, please tell us if we REALLY have 3 years or not ?

    Reply

  9. Jas March 1, 2017

    Are we looking at the possible dollarization of the economy? What about the EU15 how’s this all gonna effect the sovereign debt crisis in Greece going on at the moment?

    Reply

  10. Pat Quintilian March 3, 2017

    Hi Larry: I know you are predicting the dow is headed to 30,000. It seems counter-intuitive that you also say that gold is going to hit 5,000. How can both happen at the same time. what gives?

    Reply

  11. Tom Fenn March 11, 2017

    Rest in Peace Larry! Was shocked to hear he passed, prayers and condolences to his big family. I looked up to him and his savvy advice. I will miss him!!

    Reply

  12. anthony g March 16, 2017

    I am waiting to see the correction in the stock market that Larry predicted in
    Feb. 2017.

    Reply