Cash on the Sidelines Begs to Get in the Game

Pretend for just a minute that the chart I’m about to show you isn’t of the S&P 500.

Now ask yourself…

Would I want to own this name?

Pattern of the S&P since Sep 2012

That’s the question Jonas Elmerraji is asking his fellow traders. Oh, and your answer should be “yes”, by the way…

Jonas is offering his readers a sneak peak at some of the pivotal trends that could move markets 2014. In the report, he offers a macro view of the stocks, gold—and even an insane correlation you won’t find anywhere else.

After a brief chat last night, Jonas has agreed to let me share a quick excerpt that shows what forces could push stocks higher in the coming months…

“There’s still a lot of cash on the sidelines,” Jonas says…

“As I’ve mentioned before, some of the biggest mutual funds in the world used to be stock mutual funds – but today, they’re almost universally cash reserves funds. That’s a pretty good indication that many investors haven’t been participating in this rally; but they’ve been watching it.

“At the end of the day, I think it all comes down to how much pain regular investors can take. The folks who swore off stocks after 2008 have witnessed a market that’s rallied more that 150% since the March 2009 bottom. You can only watch stocks deliver huge year-after-year performance for so long before you decide to go back to Mr. Market.

“As all of that money comes back online, it’s going to provide a lot of fuel for stock prices.

“And as I recently discovered, the rotation from cash back to equities has historically started around five years after major market crashes. That’s far longer than most analysts expected – and guess where we are now?

“Treasuries have long been considered a great ‘safety’ investment. But they’re really only completely safe if you hold them until maturity. I think that a lot of investors who own treasuries are going to be shocked when money moves to stocks en masse, and interest rates ratchet higher (taking away the premiums they’ve enjoyed on treasuries for years).”

Regards,

Greg Guenthner
for The Daily Reckoning

Ed. Note: In this morning’s Rude Awakening email edition, Greg gave his readers an exclusive chance to access Jonas’ latest report, which details one of the most lucrative trading secrets you’ll find for the end of 2013. That’s just one of the perks of being a Rude Awakening reader. Click here to sign up for free, right now, and get your all access pass to the best research you will find anywhere.

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