{"id":15312,"date":"2025-05-18T07:37:36","date_gmt":"2025-05-18T07:37:36","guid":{"rendered":"https:\/\/finderica.com\/?p=15312"},"modified":"2025-05-18T07:37:36","modified_gmt":"2025-05-18T07:37:36","slug":"is-extreme-fear-setting-up-a-historic-rally","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=15312","title":{"rendered":"Is Extreme Fear Setting Up a Historic Rally?"},"content":{"rendered":"
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Editor\u2019s Note:<\/strong> Our friends at Monument Traders Alliance recently made an exciting announcement: They\u2019ve welcomed longtime market analyst JC Parets<\/strong> to their team as their newest contributor!<\/p>\n

JC is extremely plugged in to how government policies shape markets. Below, he discusses why the record-setting bearish sentiment we\u2019ve seen lately could be setting up a historic rally.<\/p>\n

\u2013 James Ogletree, Managing Editor<\/p>\n

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Sentiment is exponentially worse than it was back in 2016.<\/p>\n

So, what does that mean for investors?<\/p>\n

The upside is even greater!<\/p>\n

It\u2019s deja vu all over again, to quote the great philosopher Yogi Berra.<\/p>\n

We\u2019ve seen this before\u2026<\/p>\n

\"Chart:<\/a><\/p>\n

Back in the fall of 2016, sentiment was terrible.<\/p>\n

So many people just assumed that a Trump presidency would lead to a stock market collapse and volatility spike.<\/p>\n

Instead, 2017 was one of the greatest and least volatile years for the stock market in American History.<\/p>\n

And it\u2019s playing out in a similar way this time.<\/p>\n

What\u2019s the Trump Trade?<\/strong><\/h2>\n

We look for divergences between what is actually happening and what investors think is happening.<\/p>\n

The discrepancy between the two is currently at one of the most extreme levels in stock market history.<\/p>\n

The American Association of Individual Investors (AAII) just reported this week that over half their members are bearish U.S. stocks over the next six months.<\/p>\n

\"Chart:<\/a><\/p>\n

This is now the 11th straight week where more than half their members are bearish.<\/p>\n

That\u2019s never happened ever in history, and this data goes all the way back to the 1980s.<\/p>\n

You can track the weekly reports of individual investor sentiment here at AAII<\/a>.<\/p>\n

Keep in mind that during Trump Squeeze 1.0 you had epic returns for the Nasdaq-100, the S&P 500 and the Dow Jones Industrial Average.<\/p>\n

Those indexes rallied 46%, 33%, and 32%, respectively.<\/p>\n

But, for the most part, the United States underperformed during that cycle. It was the international markets that really shined.<\/p>\n

And the U.S. Dollar was falling.<\/p>\n

Sound familiar?<\/p>\n

I think Trump Squeeze 2.0 has already begun.<\/p>\n

You\u2019re seeing the rotation back into small-caps, and now even the large-cap U.S. growth is making a comeback.<\/p>\n

Technology was the best performing sector last month.<\/p>\n

And, when you look at the stocks that the Trump haters dislike the most \u2013 names such as Tesla (TSLA), for example \u2013 are ripping higher, up over 34% during the past month.<\/p>\n

Remember that our TSLA call options literally doubled less than 10 hours after we put them on.<\/p>\n

And don\u2019t forget what helped inspire our entry point and why we\u2019re making so much money in the electric vehicle manufacturer run by Elon Musk.<\/p>\n

\u201cTampon Tim,\u201d as he\u2019s known in many circles, justifiably or not, is a former vice-presidential candidate who regularly brags about how broke he is and how he doesn\u2019t own any stocks.<\/p>\n

But he took the stage at a rally to describe how giddy it makes him to download a stock market app and watch the price of Tesla stock fall.<\/p>\n

If that creepy dude giggling on stage about things he can\u2019t afford isn\u2019t a sign of a bottom, then you\u2019re just not paying attention.<\/p>\n

It was crystal clear. We\u2019re profiting tremendously for embracing the sentiment.<\/p>\n

And it\u2019s a great reminder to us all to pay attention. Always pay attention.<\/p>\n

The signs are there, regardless of your political affiliation.<\/p>\n

Keep in mind, this isn\u2019t about politics. It doesn\u2019t matter who you voted for or how you feel about the current administration.<\/p>\n

It\u2019s only about making money and taking advantage of the vulnerabilities in the marketplace caused by irrational human behavior.<\/p>\n

And humans tend to act even more irrational than usual when politics are involved.<\/p>\n

We know this. We have the data.<\/p>\n

So, we try our best to profit from it when we can.<\/p>\n

What\u2019s the Trump Squeeze 2.0 trade?<\/p>\n

I believe it\u2019s more of the same.<\/p>\n

I still think Tesla has the potential to be the most valuable company in the world during the current administration.<\/p>\n

Crypto is ripping. The communists holding back America\u2019s position in the fast-growing crypto market have been fired.<\/p>\n

A crypto-friendly administration has taken over and you\u2019re seeing that reflected in the price action.<\/p>\n

Here is the total crypto market capitalization pushing up against the highest levels ever:<\/p>\n

\"Chart:<\/a><\/p>\n

\u201cTotal crypto market cap\u201d is a calculation of the value of every crypto currency in the world added up.<\/p>\n

As you can see on the right, Bitcoin (BTC) just crossed back above the $2 trillion market.<\/p>\n

Ethereum (ETH) is pushing $300 billion, and some of the larger altcoins are increasing in value by the day.<\/p>\n

Right now the total crypto market cap is over $3.2 trillion.<\/p>\n

For perspective, it peaked at $3 trillion back in late 2021.<\/p>\n

During the prior cycle, total crypto market cap peaked at just over $700 billion in January 2018.<\/p>\n

If this cycle does what it did the last cycle, you\u2019re looking at a total crypto market cap north of $10 trillion.<\/p>\n

At the current rate, that would put Bitcoin somewhere in the neighborhood of $6 trillion, more than a 3X of current levels.<\/p>\n

That\u2019s a $300,000 price tag on a single Bitcoin, this cycle.<\/p>\n

And that\u2019s putting it conservatively.<\/p>\n

Look out.<\/p>\n

This Trump Squeeze 2.0 is just getting started.<\/p>\n

This could be one for the record books.<\/a><\/p>\n<\/p><\/div>\n