The First Threat to the 'Melt Up' Is Here

An absurd new sign of the top… The first threat to the 'Melt Up' is here… New all-time highs for Nvidia… 236% gains for Stansberry Venture Technology subscribers so far… Don't miss Lashmet's next triple-digit winner


It's one of the surest long-term indicators there is...

History shows that major market peaks are almost always preceded by ridiculous behavior among the ultra-wealthy. When you see luxury assets – things like high-end property, boats, planes, artwork, and collectibles – begin to trade hands at absurd new records, you can be sure we're much closer to the end of a bull market than the beginning.

Last night, we saw one of the most extreme examples to date. As Bloomberg reported...

[A] rediscovered painting by Leonardo da Vinci became the most expensive work ever sold, soaring to $450.3 million at a Christie's auction in New York on Wednesday.

Alex Rotter, the auction house's co-chairman of postwar and contemporary art in the Americas, placed the winning bid on behalf of an unidentified client after a 19-minute war that saw offers at $200 million, $300 million and $350 million fall short...

This sale didn't just surpass all previous records...

It crushed them. It was more than double the highest price ever paid for artwork of any kind... and nearly six times higher than the price of any other "Old Master" painting ever sold. If that isn't a sign of a top, we don't know what is.

Of course, this doesn't mean a top is imminent... And we wouldn't be surprised to see even more absurd behavior like this before the "Melt Up" finally peaks. But make no mistake... the "final inning" of the bull market is likely here.

Our colleague Steve Sjuggerud agrees...

As regular Digest readers know, Steve has been following several early warning indicators for signs that the Melt Up was peaking. And until recently, all of these indicators remained bullish.

But earlier this week, Steve alerted readers that the first threat to his Melt Up thesis had appeared. In short, one of his five most important indicators is no longer giving the "all-clear." As he explained in Tuesday's edition of our free DailyWealth e-letter...

You probably know that the overall stock market peaked in 2000. But you probably don't know that transportation stocks peaked in May 1999 – long before the overall market did.

The same thing happened in 2007. The overall market peaked in October 2007. But transportation stocks peaked months earlier, in July.

Today, we're seeing the first signs of underperformance in transports... Take a look:

As you can see in the chart, this same scenario could be starting to play out again. The overall stock market has continued to move higher over the past month... But the transports haven't "confirmed" this move with a new high of their own. And this can be a sign of trouble to come for the overall market. More from Steve...

Why are transports a leading indicator?

One possible explanation is that transportation stocks thrive when the economy is strong and goods are moving around. When the economy weakens, those goods stop moving, and transports are one of the first places it shows. So they tend to peak before the overall market.

To be clear, this is NOT a reason to turn bearish today...

As Steve explained, while this divergence is often a good early warning sign, it's not a sell signal.

More important, he noted that all five of these indicators were flashing red months prior to the tops in both 2000 and 2007. And today, we have only one unconfirmed signal out of five...

First, this is just one of the five indicators. Secondly, transports could still turn around and hit new highs, wiping out this short-term concern. And lastly, the overall market has typically peaked months after this early warning signal flashed.

In short, this is not the end of the final Melt Up stage of this bull market. This is just one early warning sign that could be starting now.

It's my job to keep you in the Melt Up as long as possible. You might think that means I need to be the biggest cheerleader for the Melt Up. But I look at it a different way...

I think my job today is to help you maximize your gains – and let you know when it's finally time to pull the plug. I'm on it...

Meanwhile, Stansberry Venture Technology holding Nvidia (NVDA) continues its remarkable rally...

Shares of the semiconductor firm surged to a fresh record high last week following its latest earnings report.

Nvidia reported third-quarter earnings of $1.33 per share, up 41% year over year, and well above the $0.94 per share Wall Street analysts expected. Revenue rose 32% year over year to $2.6 billion. The company also raised its dividend by 7% to $0.15 and said it plans to return another $1.3 billion to shareholders in fiscal 2019.

Shares are up nearly 100% so far this year, good for the largest gain among any stock in the S&P 500 Index.

Nvidia is booming as demand for its powerful chips continues to grow...

The company's graphics cards have long been a critical component for the video-game industry. But they're becoming even more important as computer monitors and television screens become larger and even higher-resolution.

These chips are also becoming must-have technology in a growing number of industries and products outside of video games, from cryptocurrency mining, to cloud computing datacenters, to self-driving cars. As Bloomberg reported recently...

One argument in favor of continued bullishness: Chips are everywhere. Once mainly confined to computers and phones, the tiny devices are now showing up everywhere from washing machines to autonomous driving systems. Consumers are coming to expect even the simplest gadget to think for itself, creating a need for more powerful components and more storage to house the flood of data they create.

This should sound familiar to Dave Lashmet's Stansberry Venture Technology subscribers...

Dave predicted these trends when he originally recommended shares early last year. As he explained in the May 2016 issue of Stansberry Venture Technology, video gaming alone could continue to drive business for years...

Nvidia is the leading designer and manufacturer of graphics cards for video gaming. And as computer monitors and television screens have gotten larger and added more resolution, the computational burden used to create graphical images has likewise increased...

This trend will continue during the consumer rollout of "4K" screens. The new 4K ultra-HD standard requires a visual resolution of 3,840 x 2,160 pixels – about 8.3 million pixels in total – which is four times the resolution of today's HD screens...

But it doesn't end there. Even-higher-resolution screens are coming soon.

Last year, Dave saw a prototype of the next-generation 8K screen from Samsung at the Consumer Electronics Show in Las Vegas. He described the detail in the image of a slow-motion, life-size gymnast as "awe-inspiring."

Dave says these better-than-lifelike images now have a role in our culture – and graphics will follow, because better graphics will drive game sales. And as Dave noted, this is a vastly bigger market than many folks may realize...

Globally, sales of video-game software for PCs were $32 billion last year, according to gaming-research firm SuperData. Console downloads added another $4 billion, and mobile games for phones and tablets were another $24 billion.

Likewise, market-research firm Statista projects $18 billion in global 4K screen sales in 2015, and $52 billion in sales for 4K screens by 2020...

So this is a massive market – far bigger than just one company. And yet, one company makes the lion's share of profits in graphics cards: Nvidia.

But Dave also foresaw huge demand for these chips in the burgeoning field of 'machine learning'...

For example, he noted that Nvidia's graphics cards could make fully self-driving cars a reality. As Dave explained, a large hurdle still remains before this technology will ever become widespread. More from the issue...

Industry lawyers like to call developments in this field "advanced driver-assistance technologies" to avoid liability for life-or-death decisions. For example, "driver assistance" technology that applies the brakes or pulls you back into your lane is much easier to defend than tech that leaps curbs to avoid a head-on collision – but which in turn crashes the car into a school bus stop.

The key will be in absolving carmakers from liability. That's when we will see truly driverless cars. Most pundits think that this is still five to 10 years out. Self-driving cars simply aren't good enough yet, largely because of weather and unexpected circumstances that really can't be programmed for: a truck losing its load or a tree falling across a road.

But Dave said Nvidia's chips could solve this problem in a unique way. In simple terms, it's like playing a video game in reverse. The same technology that enables them to create realistic objects and movement in games can allow them to track real-world objects and predict their motion...

Imagine that you're tracking a semitrailer... Odds are that it weighs between eight and 28 tons and has good tire tread. So in the next five seconds, it can go five miles per hour faster if it steps on the accelerator... or 30 miles per hour slower if the driver mashes the brakes.

Nvidia has calculated an expected tracking range for cars, delivery vans, semitrailers, bulldozers, motorcycles, bicycles, and pedestrians walking beside and across a road... even dogs and cats. So it can predict future motion.

And as Dave explained, simply by integrating fixed objects – like streets, curbs, and stop signs – with the moving-objects data, a self-driving car can reasonably navigate through a city. In other words, Nvidia is taking lessons it has learned from video games and applying them to real life.

That alone is impressive...

But as Dave noted, Nvidia's technology goes even further. It utilizes a process called "deep learning," which could become the future of the Internet and mobility. This allows the car to "learn" to drive on its own, without a pre-programmed map or database...

Here's how Nvidia's car learned... For months, the car "watched" data of what real-life drivers did in reaction to different scenarios. Then Nvidia took the car out to a closed course and let it start hitting cones. After a while, it started hitting fewer cones... then no cones.

From there, the research team let it drive around cemeteries with no street names and no curbs. Then the car went into suburban streets. And finally, it started driving along the New Jersey Turnpike.

This is also the logic that will help a car negotiate snow, ice, and slush as proficiently as any human driver. That's because the car can do more than just learn from its own experiences... It can also upload data from other cars.

Why is this important?

Because with no computer code telling a car what to do, automakers face much less liability. This could help make self-driving cars a realistic and affordable option far sooner than many believe possible.

But again, Dave noted the potential extends far beyond self-driving cars alone.

This kind of self-learning system is already being used by all the cloud computing companies – Facebook (FB), Amazon (AMZN), Microsoft (MSFT), IBM (IBM), and Alphabet (GOOGL) – to optimize data routing in real time. And Dave predicted these systems would soon spread to countless other industries...

The bigger picture is that lots of systems can now become "self learning." These machines will range from robots on an assembly line to refrigerators that order more milk to be delivered to your door when you're close to running out.

Machines are learning to think for themselves. This has never happened before. And the world might be forever changed. The upside is that early investors will profit the most.

Dave has been exactly right so far...

And Stansberry Venture Technology subscribers are benefiting. Folks who took his advice are up more than 236% so far.

But we're not surprised...

You see, more than one out of every four stocks Dave has recommended in Stansberry Venture Technology has soared 100% or more.

This is an unheard-of rate of success in our industry. And if you tuned in to our first-ever cancer webinar last night, you know Dave believes he has found his next potential triple-digit winner.

Of course, that wasn't the focus of the event... Dave and Dr. David "Doc" Eifrig spent most of the evening discussing the latest developments in cancer treatment. They even gave attendees a free copy of Doc's book – The Living Cure – explaining exactly what to do if you or someone you love is diagnosed with this terrible disease.

But Dave also introduced a revolutionary new device that could save the lives of millions of folks over the next several years. It could be approved as soon as December 31... And he believes the small company behind it could soar 200% or more when it is.

If you missed last night's event, it's not too late to learn more about this incredible opportunity. Click here for the details.

Editor's note: Today, we're featuring the latest installment of our "Chart of the Moment," a weekly feature from our colleagues C. Scott Garliss, Greg Diamond, and John Gillin of the Stansberry NewsWire team. In the Chart of the Moment, they share the most important idea, trend, or opportunity they're following each week. We hope you enjoy it... And please let us know what you think at feedback@stansberryresearch.com.


Chart of the Moment

Today, I (Greg) am taking a look at the long-term chart comparing the iShares iBoxx High-Yield Corporate Bond Fund (HYG) with the benchmark S&P 500 Index.

When high-yield (aka "junk") bonds are rallying, this can viewed as a "risk-on" move. As people perceive the market to be safer, they tend to flock to riskier, potentially higher-yielding investments like junk bonds.

Take a look at the following chart... Notice how the S&P 500 rallied alongside high-yield bonds at the bottom of the financial crisis. Also take note that HYG's pullbacks led to led to corrections in the S&P 500. It appears we are witnessing the same price action now.

However, the biggest observation I take away from this chart is how HYG began to correct in mid-2014 while the overall market continued higher. Will this massive divergence revert to the mean? This chart is worth monitoring closely...

– Greg Diamond, Stansberry NewsWire


Editor's note: Stansberry NewsWire is your source for real-time, actionable financial news and analysis. You'll receive up-to-the-minute news and market research, expert commentary, and trading ideas typically reserved for Wall Street professionals and the wealthiest individual investors... absolutely FREE. Click here to sign up now.

New 52-week highs (as of 11/15/17): American Financial (AFG), CBRE Group (CBG), Franco-Nevada (FNV), Tencent (TCEHY), and short position in Interpublic Group of Companies (IPG).

In today's mailbag, feedback on our Alzheimer's disease research... and kudos for Porter's bold energy prediction. Send your notes to feedback@stansberryresearch.com. And if you joined us for last night's first-ever cancer webinar, we'd love to hear what you thought.

"I would like to commend you initiating a discussion on Alzheimer's Disease and in particular Biogen's new drug. My wife is 59 and was diagnosed with 'amnesic mild cognitive impairment' around 6 years ago but in retrospect had symptoms 10 years prior. Dementia is a truly hideous disease, to watch the insidious erosion of every day skills is agonising in the extreme. Sadly, the release of 'Aducanumab' may be too late for our situation but I firmly believe it may be the cornerstone to defeat this disease. Thank you once again for showing that Stansberry Research is not just about money." – Paid-up subscriber Steve Gray

"Hi Guys/Gals, just thought I would pass this along to let Porter know how far ahead of the herd he was with his oil & gas predictions [more than] 5 years ago... This was a headline in one of my trade publications just this morning: 'U.S. to Dominate Oil Markets After Biggest Boom in World History.' Cheers." – Paid-up subscriber Mike D.

Regards,

Justin Brill
Baltimore, Maryland
November 16, 2017