The Stock Market's Hot – Don't Touch!

by Andrew Zatlin August 04, 2023 2:00 pm ET

The stock market is hot right now – up 12% in the past two months.

But based on my data, this market is dangerously close to overheating.

Let me tell you why and explain how you can not only avoid losing money when it cools off, but actually make money.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

The Stock Market's Hot – Don't Touch!

Here at Moneyball Economics, we use data to find investment opportunities. That's at the heart and soul of what we do.

Lately, the opportunities I've shared with you have paid off handsomely. For example:

In the spring, when Silicon Valley Bank and First Republic imploded, most investors ran away from the banking industry. But based on the data, I told you to head towards it. "Pro" readers had a chance to invest in Wells Fargo (WFC). And right now, they're sitting on double-digit gains.
When the Bud Light fiasco happened a few months back, the data hinted at investing in Molson Coors (TAP), a rival beer brand. Did you follow my advice? If so, you're up 8% right now.
And most recently, I explained how the data forecasted a July surge. And sure enough, the S&P 500 and Dow Jones Industrial Average climbed another 3%.

Now, I want to prepare you for our next opportunity. And there isn't much time to get ready...

Caution: Hot!

This opportunity centers around the idea that the stock market is hot – too hot. In fact, it's getting ready to overheat and then experience a rapid cooldown.

How do I know? The data, of course! More specifically, three factors have me convinced...

Factor No. 1: Something Doesn't Add Up

First, there's an old saying: Stock prices ultimately follow earnings.

But strangely, earnings being reported recently have been flat. Yet the market continues to climb.

Simply put, a rising market amid dismal earnings doesn't pass the sniff test. And you can bet that the market will soon fall to more closely mirror the status of companies' earnings.

Factor No. 2: The Market Is Stagnant

Second, the stock market has spent the past few months climbing, but it's spent the past few weeks moving sideways. Take a look:

For the past two weeks, the S&P 500 has hovered around the 4,500 mark. Often, that's a sign that it's about to consolidate and pull back.

As for the third factor...

Factor No. 3: Investors Caught Slipping

We need to analyze what caused this market surge in the first place.

In the spring, there was nothing but bad news out there. Earnings were dropping, the economy was slowing, and interest rates were skyrocketing. As a result, the smart money did what it always does – positioned itself for a stock market pullback.

There was just one problem: A lot of investors didn't realize the strength and excitement surrounding artificial intelligence ("AI").

It you recall, AI came out to tremendous fanfare and boosted tech stocks. That sent the market up and forced a number of investors who had bet against the market to reverse their positions and scramble to buy shares.

Essentially, this created a unique situation for short-sellers – or those betting against the market. Noted famous investor Dan Loeb, "The short-selling environment is much more challenging than it has been historically."

Dan, like many, got caught betting against the market, and when it started going up, had to flip his trades. This reversal in exodus created what's referred to as a short-squeeze.

Here's the thing, though...

Prepare for the Cooldown

The market landscape is about to change. And while temperatures outside continue to rise, the stock market is about to cool down.

What can we do about it?

A lot of investors will surely head for the sidelines once the market starts to dip. Others will simply ride it out – the "set it and forget it" approach.

I've got a third option, which involves finding ways to make money during this pullback. That includes today's specific play that could generate returns of more than 200%.

Want to join me? Make sure you're a "Pro" subscriber to learn how to take advantage of this latest data-backed opportunity.

We're in it to win it. Zatlin out.