FLS Update: Dalio Is Reading This Report… 01/23/2018

 

Earlier today, Ray Dalio, the largest hedge fund manager in the world, told CNBC at Davos that he expects the stock market to rip higher and enter a climax run. 

 

Interesting, because that is exactly what I wrote in last week’s report. Good to see someone is reading this and that Mr. Dalio agrees with me… Last week I wrote, “It doesn’t take a genius to figure out the market is super extended up here. In fact, some technical readings show that this is the most overbought market we have seen in decades, if not in history. The fact that the market has gone straight up leads me to believe that we are in the late stages of this bull market. Normally, based on how this market has been trading, I wouldn’t be surprised to see a climax run develop sometime in the near future, before it tops out. During a climax run, the market could easily shoot up another 40 or 50% in a short time before topping out. We are not there yet, I just want to share what I’m seeing with you because no one out there is cautious right now. Remember, bull markets end when everyone/everything (all the news) is super bullish. It just feels like everyone is bullish right now and we all know what happens when a trade gets too crowded (there’s no one left to buy).For now, the first level of support is the 50 DMA line for the major averages.” 

 

To be clear, in the short-term the market is very extended and due to pullback. The intermediate and long-term outlook remain bullish.