Stock surge is a bear market trap with curve - inverted bank of america warrants now. This is an article that has popped up on march 29th. This is coming from the bank of america and i thought to myself. This is so stupid.

This is dumb. This is a stupid article. This is a fear-based article and i'm going to show you exactly why i don't agree with literally anything that's being stated in here, but before we get going welcome to trace trades where you can talk faster, don't give class like above by sam floor advisors, not financially. Please take them to the green assault, let's get into the video.

The reason that i think this is important to talk about right is because there are lots of people out there who are fearful of what's happening with the market, and i've always tried to explain things in two ways: right you've got certainty in the markets and you've Got uncertainty in the markets? These are the two things that move the market. The market does not equal the economy right. So what i wanted to talk about today is why i personally believe that this article is a lot of, because i really do think that stock surge is a bear market trap uh. I i really don't believe that at all so we're going to show you the agenda for the day we're going to start off.

First, with this bank of america news, i've got the article down here that we're going to dive into uh just to show you kind of what these guys are saying and what their thought process is behind all these statements and in order to really dive into this, We have to understand first, how yields work, which will bring us into uh sort of the historical returns of the market. While there are issues with yield, returns right, so we're gon na dive into that, and then i'll give you my thoughts as the final piece and we'll send you on your way, because i do think that there's lots of people out there who who will miss out On what i think is going to be an absolutely monstrous rally to come now, this is not to say: there's not gon na be a recession, i'm gon na dive into this uh, but, it is to say, you're, sacrificing a lot of gains specifically in growth companies. If, if you let like this scare, you so uh, let's start off first by reading this article, what are we, what are we gon na see right you're going to find here, the 11 surge in u.s stocks in the past two weeks has the hallmarks of a Bear market rally right bear market rally, specifically meaning uh, that we are in a bear market and this is essentially just a bull trap. I personally disagree we're gon na dive into this.

More as we continue on that's the conclusion of analysts at bank of america. Hey look, you know the more of the story. Here is: first half you can stop watching the rest of the video. If a bank is telling you something, you know, there's obviously a conflict of interest here, the world's wealthiest people guys get get out get out.

Let us buy up your as you sell. Oh yeah, you already know you already know what this is, who say: warning signs are flashing for a market that has climbed, despite clearly weaker fundamentals. This is a key part that i'd like to dive into more, as we continue on, including the federal reserve bent on raising rates throughout this year to battle persistent inflation. Now, there's a couple of things just in this first paragraph alone, that we can challenge regarding what the bank of america analysts so to speak, have been saying, they're, saying that there's clearly weaker fundamentals in the market and they're, saying that the fed is planning on raising Rates right well, we know that both of these things, uh factually speaking, historically speaking, i'm worried that titan's going to bite my ankles, sorry, factually and historically speaking, have not mattered for market rallies.

If you look over here right, i'm going to show you this and we're going to dive into uh what this. What the yield curve looks like right now, because this is actually going to be important - you can see that there is actually been inverted yield, curves, which is supposed to warn of an incoming recession in which you saw a market rally and a market run right. I mean you've seen some massive massive moves in bull markets. You can look back here.

There was an inversion on the two-year and 10-year yield back in 1988 and what you saw was a 33.2 s. P 500 return in the next two years. Until finally, you got some form of a move to the downside 19.1 months again in 1998, up until 2000., you saw another bull market peak and ella returned to 39.6 percent, the s p, 500. 22 months.

You can look over this yourself right, 2005 to 2007. Another 24 21 months separating these inversions and and the more the story is right that yield curve. Inversions don't mean panic, panic, panic, panic! Ah, let's get out of the market now, no, no stupid dumb! That makes no sense right. So the other thing is going to be uh interest rate hikes.

Now i've talked about this before, but i'd like to dive into it a little bit uh right now, i've seen data proving that you can have a bull market during interest rate hikes. Essentially, the way that you have to think about this very simply put is by looking at it in terms of certainty and uncertainty. Certainty comes from knowing what is to come right. So if you don't know what interest rate hikes are going to look like, that is the opposite.

This is uncertainty, uncertainty equals fear, fear equals bear markets. So the longer that you have fear the longer you have uncertainty. The longer you have a bear market. Well, once you announce an interest rate hike, people know what to expect.

You get a transition. It goes from uncertainty to certainty. You have an absolute understanding that, yes, this is going to happen. The fed is going to raise rights.

It's going to hurt growth a little bit in the economy. Things aren't going to look well right, but we know what's going to happen, which gets rid of fear and it causes confidence. What is the confidence in? It's not necessarily confidence in whether the economy's looking good or the economy is looking bad. It's confidence in.

We now know, what's going to happen, so we can make an investment based on what we know. If you think about it psychologically speaking right, if you don't know, what's going to come, do you feel more or less comfortable, holding a stock right, maybe not as comfortable? I personally wouldn't versus certainty. If you know what's to come, you can buy what you want to buy. Maybe that means slower growth right.

Maybe less people feel comfortable, but that certainty breeds confidence in your own decision making versus uncertainty or fear. People are more prone to panic self. Despite all these things, so certainty equals confidence equals a bull market right. You can look at the historical data.

It'll show you the exact same thing: it'll show you you've had periods of time where interest rates were raised and we had bull markets right. So i want to focus primarily on this piece and in order to truly understand this, we have to first start off with yield curves now what is a yield curve right? Well, if you look over here, i've got this pulled up. This is the us treasury yield curve and what you can do is you can go back historically speaking to any time that you want and look at what the yield curve looked like. You can see here what uh people have been starting to talk about.

You can see an inversion so to speak on the 20 year versus 30 year as of today, and if you look back to october of 2021, you had a flat line right, i'm going to discuss what these things sort of mean. You go back even further and you didn't even have this. It was just basically a straight up line, which is showing a growth in the economy right we're gon na dive into this as we continue on, but where we sit right now and what's probably of most interest, is you have sort of this? This rising up of the curve, a flat line, followed by a inversion the curve you get more return right on a shorter maturity versus a longer maturity. Now, what does this mean right? Let me come over here where i've drawn this up.

I've got three different sort of uh stages of a yield curve. This is referring to treasuries right, uh, you've got confident, you've got uncertain or sort of a transitionary period and then you've got high fear. Now confident is this. The shorter maturities maturities are down here on this axis yields are on the y-axis.

You can see uh. This sort of just straight up line looks like a stock, looks like freaking game, stop back in january of 2021, just going straight up to the freaking moon, and what this means is longer maturities have overall higher yields. You can see this right here. High yields for longer maturities makes sense, and what this is basically saying is you expect some really solid, fast economic growth.

Typically, this means that you're going to see inflation rise and you get the cycle you can kind of see where i'm going right. Where you get this cycle of fast uh economic growth, followed by inflationary periods, followed by uncertainty of flatlining and transitioning into uh, the fearful state of the market, where they have to raise interest rates and slow the growth of the economy and this cycle just continues on. And on and on and on and on and on right now, you've got uncertainty in the yields. What this is going to show you is: there's not a large difference between yields in terms of maturity, typically in a good economy, you're going to see uh, solid maturity, yield uh growth right you're, going to have this line you're going to see that there's more yield For a longer maturity, well, this transitionary period is leading into a fearful yield.

Now. What does this mean? If you were to think about the psychologically speaking, you can see here uh in this scenario that there's a higher yield for an overall shorter maturity. Let's just come over here to the actual uh yield curve. You can see the one month, three month, six month, one year, two year, three year, five year, you're getting the same bang for your buck.

In fact, you're making more on a three year versus a five year maturity. You can see it two, a 2.42 interest rate versus a 2.45. You get a .03 edge for a shorter maturity, and what this is telling you is people are fearful of what's to come in the future. This does not necessarily mean that the stock market's going to go down, as i'm going to show you again with this.

This chart that i had previously shown right, but what it does say is people are uncertain about what is to come in the future. What i would say is a more useful way of looking at this outside of this slower economic growth and a recession ahead. Is this, but what is this actually indicative of it's indicative of fear? This is indicative of people being worried of what's to come in the future. So if i was to think about this logically right, if i was to transition this uh into the stock market, when's the best time to buy it's at peak fear it's the period of time in which uh, when there are more people panicking and freaking out than Ever before uh, even if this means there's a recession ahead and i'm gon na tell you why.

I do actually personally believe that this this inverted curve is going to indicate some form of a recession, but for people to panic and for the bank of america to tell you this right now that this is actually just a bear market rally. This is basically them saying that they believe that the spy, the s p 500 - the entire market - is gon na, be in a bear market for the next two years, which i think is ludicrous. I think that's insane. I think what this is.

Is them not allowing you to make money in lots of small and mid-cap companies? They're gon na have massive massive rallies in the coming 12 months to 24 months i mean who knows how long it's going to last? Will the recession come? Historically speaking, we know. That's the case. We know that recessions uh are parts of the ebbs and flows of how the economy and the market works, but does that mean that you're not going to get growth? In the meantime? I i think that you should be asking that question. I think you're gon na you should look at this data right here and see that every time you've had an inverted two-year 10-year yield curve.

You see massive returns in the spy, and what does this mean? It means that you're going to see massive returns in the iwm, which is small, mid cap companies that wrestle 2000. I actually think you're going to get a better return on the russell 2000 over the next three to six months than you are in the s. P. 500, because of how small mid cap companies are going to rally and shorts are going to exit positions, this is all to say right that an inverted yield curve, even if it is an indicator.

You can look at this as an indicator that says there's a recession ahead, there's a session ahead, whatever it is, not a short term indicator. This is not something that that i personally believe influences in a one day, one month, even three month period of time. If you look at the actual yield curve right, this warning sign that there is an incoming uh recession. Let's just go back a month right.

How long has this been the case? You've had this a month ago, you look back to january 31st. What do you see a month ago? What do you see back here right a month ago, all the way back to november, we've already had a yield inversion of the 20 year and 30 year. How about that kind of strange kind of strange how the market's been rallying here? You have this transitionary period, and this didn't manifest right. This inversion from way back in, let's just go to october 31st, where you've got the first sort of real inversion of the yield curve.

You really didn't even see this manifest until months later months later, right months, it took a very very very long time. Now we come back up to march 2022 and what do you sort of see happening right now right? I think, there's sort of a key thing to be watching and it's this flat lining of the two year to the 10 year right. We just talked about how there's an inversion of the two year to the 10 year. You see 2.28 right here, you see 2.32.

I wouldn't even quite say it's an inversion yet, but it is getting close. It's getting close, there's a certain reversion. The inversion between the three and the ten, this is indicative that, in the future you can expect some form of a pullback. Are we there yet right? Are we actually there yet? I think you're missing out on gates.

I really do i think, if you're going to be sweating over uh, this yield curve inversion. What you're, what you're, really giving into is fear you're just giving in to fear, i mean you're, just letting this dictate uh. What you're doing with your money and with your investments? So that brings me back to this analyzing the news looking at what this is talking about my main takeaway from this bank of america analyst is these geniuses and their chicken costumes in the back of an office. They're sitting there and they're doing one thing and my personal opinion what this is is who buys and who sells right? What are they doing? What are these guys doing? Well, if you think about it, when an institution a toot wants to sell stock, what do you need right if they want to sell what do they need? They need buyers.

So, if they're over here telling you that hey the market looks, this looks like a bear market rally. This looks terrible. This looks really freaking awful. What do you actually think is happening right? If they're, if are they really selling or are they buying? Are they buyers? Are they buyers in this current market? I personally believe this is the time to buy right when there's fear like this, when people are freaking out and telling you, even though i personally believe that a lot of the uncertainties in the market, though really the last thing, is russia.

Once this russia conflict uh resolves itself, i think you're gon na you're gon na you're gon na see you're gon na see you're gon na see the market go absolutely nuts uh. I think the bank of america is dumping uh or not even dumping they're just buying the that you're dumping. If you get into this, i think that's what this comes down to is a conflict of interest where they're trying to get you to be a seller, so they can be a buyer and they can scoop up your stuff right. We've seen the historical returns we've seen the historical returns of two year and ten year yield curve.

Inversions you've seen that over long periods of time, 19, 22, 21 total months. You continue to see the bull market rally the way that it did uh, and that brings me to what i'm saying, which is don't pay attention to the 30 days here. I saw the reason that i saw this in the first place is i saw this tweet from gergavin and he was talking about you know. The bank of america warns of a stock surges, bear market trap with curve, inverted and he's saying you know.

Since uh this article came out the stock market's been down for three straight days. You can't look at this in a three day period of time. You really got to look at this on a month to month, to month, to month, to month basis, and even then i think you're not getting the full picture until half a year. Sometimes later i mean the shortest period of time in which you see this.

Two. Ten year curve, inversion, uh was five point, eight months until the next bull market peak right - this is not worth sweating over. This is to me. This is just a sign that that you saw peak fear and this bank is trying to sell to you, even though it's it's already starting to decline, i i really don't think uh this is.

This is worth sweating over, so my thoughts. My final thoughts, if i was to give you a closing statement right, i'm gon na write this down and i want this to be drilled into uh into your guys's heads. This is huge right economy does not equal market. If you can think of things, this way right, if you can think of things in terms of the economy, is slowly shifting towards what seems to be a recession.

This does not equate, however, to the market being in a bear trend. We've seen this right, we've seen uh interest rates, go up, we've seen growth, slow down in the economy and we've still seen the market hulk dick up to pluto. It just happens. This is the way that the market works.

Historically speaking, you can't it's just provable. It's provable, you can look at things and see exactly what i just showed you uh and you're gon na walk away. If you can understand this, i think pretty happy. I think you're gon na walk away, pretty happy uh.

If you don't buy into this fear - and the reason i wanted to address this in the first place - is because i do not want people missing out on the small mid-rally, i really do personally believe you are going to see small mid-cap companies continue to rally as You have seen you look across the board and a bunch of different stocks. I'm going to pull this up for you here, really quick check this out. We can pull up uh. We can pull up a mullet right.

Let's, let's just check out mullen, you can look at this. You can see this nice rally. You can pull up uh bbig! You can see. This is starting to rally off of some bottoms.

You can pull up. Let's just do roblox right, roblox, starting to rally off of a bottom. You can pull up a firm, a firm starting to rally off of a bottom. I think you're missing out on gains man.

I i think people are gon na, be very sad if they miss out uh trying to time what what appears to be, perhaps a recession or a market flash crash timing, a market flash crash is impossible. All you can do is take it. You know month by month, by month by month and look at that data and say yes sometime in the next, maybe two years. Historically speaking, you will see a bear market.

I think the bear market we lived through the three months of i think, that's gone. I really do i haven't seen data to prove to me, otherwise i haven't seen uh uncertainty to prove me. Otherwise, if, and only if and until uh russia attacks, a nato country or the united states, i think that we're chewing so uh, i think, there's more green to come. I really do i wanted to talk about this, and this weekend i'm going to be discussing uh.

The play of the day from from today, which i talked about in yesterday's video, i'm gon na, be going over amc. I'm gon na be going over the the s. P 500 we're gon na dive into more of sort of the worldwide economic situations, geopolitical situations whatever and giving you that update and uh we'll have some other stuff too. So i suppose that's what i've got kind of a long video, but i hate people that sell fear like this.

If it's not warranted - and i really don't feel like this is warranted. I feel like this is some goofy uh and i'll catch you all later. So until the next one appreciate you all much love light taps and peace.