The Russell 2000 Index Is Down 33% From Its High

The Russell 2000 Index, the purest stock play on the U.S. economy, is down 33 percent from its record high set in August of 2018, wiping out all the gains from June of 2016, 3 months before real Donald Trump was elected President. A Presidency that lives by the stock market dies by it as well!

Related trading instruments: iShares Russell 2000 Index ETF (IWM), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), SPDR Dow Jones Industrial Average ETF (DIA)

Markets: Russell 2000 Index Is Leading The Market Lower

Highlights from the most recent podcast (December 14th):

Peter cited the current weakness on the Russell 2000 Index and how it is leading the market lower:

"In fact, the weakest indexes continue to be the Russell 2000 - I've been talking about the weakness in the small caps. That index is now down better than 19% from its peak just about 4 months ago. So we're almost officially in bear market territory. We'll probably be there by Monday, judging by the technicals." 

Peter also mentioned the Dow Jones Transports as another index that is already trading at its lowest levels of the year:

"The other index that is leading the way down is the Dow Jones Transports. This index is now down better than 18% from its peak. Both the Transports and the Russell 2000 are at the lowest levels of the year."

Peter Schiff will be live on Fox Business News on Monday on the show "The Countdown to the Closing Bell" to discuss current market events. 

Federal Reserve: Shrinking The Balance Will Have Consequences

When Alan Greenspan took over the Federal Reserve in 1987, its balance sheet was at about $200 billion. A few years ago, it reached $4.5 trillion. Shrinking it will have consequences.

Related trading instruments: 

• SPDR S&P 500 Index ETF (SPY)
• SPDR Dow Jones Industrial Average ETF (DIA)
• iShares Russell 2000 Index ETF (IWM)
• Nasdaq 100 Index ETF (QQQ)

Stock Market: We Are In A Bear Market

We're in a bear market, it's just not officially acknowledged yet. You know, just like a lot of times you know they don't acknowledge the recession until after you have two quarters of negative GDP growth but clearly you're in the recession for a long time before it's officially admitted. 

There's one caveat if the Federal Reserve comes in and changes the game by taking away the rate hikes or launching QE 4 then we may never make it to a bear market. But if the Federal Reserve continues on its current path and maintains the current pretense then we are in a bear market and it's only a question of time before it is officially acknowledged.

Related trading instruments: 

• SPDR S&P 500 Index ETF (SPY)
• SPDR Dow Jones Industrial Average ETF (DIA)
• iShares Russell 2000 Index ETF (IWM)
• Nasdaq 100 Index ETF (QQQ)

Stock Market: More Down Quarters To Come

The market action that I've been observing really to me looks like a bear market. 

For the first quarter all the major stock market indexes were down. This was the first time in 10 quarters as we had 9 consecutive positive quarters (I think that's a record).

The US stock market finally broke that winning streak we'll see how investors who thought the US stocks can only go up may react to their first down quarter in ten. But it's not going to be the last down quarter, I think this could be the beginning of several more down quarters to come.

Related trading instruments: 

• iShares Russell 2000 Index ETF (IWM)
• SPDR S&P 500 Index ETF (SPY)
• Nasdaq 100 Index ETF (QQQ)
• SPDR Dow Jones Industrial Average ETF (DIA)

Thoughts On The Stock Market Bubble

There's no way that if you are investing rationally if you are buying value stocks right and using your brain, there is no way that you're gonna outperform a bubble. Nobody can do that but of course once the bubble pops that's when the outperformance comes in. I mean and if it's a bubble you are guaranteed to outperform it if you just can wait it out because bubbles by definition always pop and when they do they collapse.

Related trading instruments: 

• SPDR S&P 500 Index ETF (SPY)
• iShares Russell 2000 Index ETF (IWM) 
• Nasdaq 100 Index ETF (QQQ) 

The Beginning Of A Much Bigger Downturn

In February's big decline the Dow Jones Industrials Index (DJIA) dropped better than a thousand points on the month and we'll see if this is the beginning of a much bigger downturn. In fact it could easily be the beginning of a bear market.

Related trading instruments: 

• SPDR S&P 500 Index ETF (SPY)
• SPDR Dow Jones Industrial Average ETF (DIA)
• Nasdaq 100 Index ETF (QQQ)
• iShares Russell 2000 Index ETF (IWM)

The Dow's Record Breaking Monthly Winning Streak Has Come To An End

The Dow Jones Industrials Index (DJIA) was down 380 points today. In fact this is the second consecutive 300 point drop we've had in the Dow you know the Dow now is down about 4% for the month of February which just came to an end today and that also means the Dow's record-breaking monthly winning streak has also come to an end remember the Dow has been up every month since Donald Trump was elected president including every single month in calendar year 2017 that is something that has never happened in the history of the stock market.

Related trading instruments: 

• SPDR Dow Jones Industrial Average ETF (DIA)
• iShares Russell 2000 Index ETF (IWM)
• SPDR S&P 500 Index ETF (SPY)
• Nasdaq 100 Index ETF (QQQ)

Interest Rates Are Going a Lot Higher

Related trading instruments: 

• iShares Barclays 20+ Year Treasury Bond ETF (TLT)
• 10- year U.S. Treasuries, SPDR S&P 500 Index ETF (SPY)
• SPDR Dow Jones Industrial Average ETF (DIA)
• iShares Russell 2000 Index ETF (IWM)
• Nasdaq 100 Index ETF (QQQ)

Massive Volatility Is Indicative Of A Trend Change

We're continuing massive volatility which is I said to me is indicative of a change of trend because we were so long in an uptrend with no volatility now all of a sudden you have this massive volatility.

Related trading instruments: 

• Select Sector Financial Select Sector SPDR ETF (XLF)
• SPDR S&P 500 Index ETF (SPY)
• iShares Russell 2000 Index ETF (IWM)
• Nasdaq 100 Index ETF (QQQ)

Stock Market: Volatility Signals a Trend Change

When you have a trend and then all of a sudden you see lots of volatility generally that's a sign that the trend is changing and the trend has been up obviously stocks have been trending up for years and they've been trending up with minimal volatility. When all of a sudden you see massive volatility does that mean the trend is likely to continue? No! It's more likely a sign that the trend has come to an end. (SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index ETF (IWM), Nasdaq 100 Index ETF (QQQ), SPDR S&P 500 Index ETF (SPY))

This Just Shows How Quickly The Market Can Go Down

If you look at the five days from the high, in five trading days the Dow Jones futures lost about 13 percent of their value. In five days! Now that just shows you how quickly the market can go down, I mean, the next time it could lose even more even faster. (SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM), SPDR Dow Jones Industrial Average ETF (DIA))

Inflation Is Bullish For Gold

The stock market should be affected by higher interest rates but no, they don't care but they somehow think it's going to be bad for gold. But the reality is higher inflation is great for gold, that's why people buy gold as it's a hedge against inflation. So the more inflation the more demand there is for gold.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), iShares Russell 2000 Index ETF (IWM), SPDR Dow Jones Industrial Average ETF (DIA), SPDR Gold Trust ETF (GLD)

Stock Market: Heading For A Crisis

This is the best start since 2006 and of course people who were buying stocks in 2006 had no idea of the magnitude of the financial crisis that would hit the market in 2008 well the same people are even more clueless today because the crisis that we're heading for is going to be much much bigger much worse than the one in 2008. (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM))

US Stock Market: This Never Happened Before In History

I think this is the first year that the Dow Jones Industrials Average (DJIA) has ever gained 5,000 points in a single year. In fact, the Dow Jones was up every month of 2017. That's never happened before in history.

In fact, we've gone 14 consecutive months without a decline and not only were we up every month but 2017 represented the lowest year ever of stock market volatility meaning that even though the market was going up it barely ever went down so it never made anybody nervous.

Related trading instruments: SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index ETF (IWM), Nasdaq 100 Index ETF (QQQ), SPDR S&P 500 Index ETF (SPY)

Stock Market: The Trump Rally

Where Trump is is getting into trouble is by claiming that the stock market going up is no longer a bubble that now this is just a real bull market that reflects the improvement of the fundamentals since he's been elected.

That's not the case. This is simply more air into the same bubble and this bubble is going to burst and I think unfortunately now that Trump has branded it you know just like it was one of his buildings he's put the big Trump marker on it, when this thing pops it's he's gonna have to take the blame. (SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index ETF (IWM))

Stock Market: The Valuations Here Are Extreme

The valuations here really are extreme, the complacency is also extreme. I mean investors are willing to pay very high prices and have very little worry that the stock market is going to go down.

People have very short memories, I mean we've had two major 50% declines in the stock market this century. Since 2000 we've had the market cut in half twice and it could easily happen again yet nobody seems concerned. 

Related trading instruments: SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM)

Trump, Stock Market & Consumer Confidence

So we have the stock market at all time highs, we have consumer confidence high yet Donald Trump's popularity has never been lower! (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM))

US Stock Market: Complacency, Overvaluation

I think if you look at the amount of complacency relative to the overvaluation stocks have really never been this expensive and people have never been this sure that they're not going to go down.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), iShares Russell 2000 Index ETF (IWM), SPDR Dow Jones Industrial Average ETF (DIA), Nasdaq 100 Index ETF (QQQ)

The Federal Reserve Will Not Upset The Status Quo

The Federal Reserve does not want to do anything that might upset the status quo. And at this point, the Fed is between a rock and a hard place. The central bank can normalize interest rates, which will ultimately pop the stock market bubble, or it can continue with its easy monetary policies and wreck the US Dollar. The Federal Reserve will ultimately sacrifice the currency (US Dollar) on the altar of the stock market.

Related trading instruments: SPDR S&P 500 Index ETF (SPY)