Looking At The Top

I believe we are slowly approaching the stock market top.  As I mentioned in my May 28 blog about Precision Drilling, I believe the gains in the broad market like the S&P 500 will get smaller and smaller as we get to the absolute top of the market.  Think about throwing a rock up in the air.  When the rock has almost reached its highest position, the speed of the rock will be very slow and will arrive at zero speed just before gravity pulls the rock back to earth.  I think the S&P will struggle to make just 10% this year, and it will be worse next year.

In view of the meager gains of the stock market in the next couple of years, I believe that only a few select stocks will make gains of 20% or more.  TMF, the 20+ years treasury bond bull 3x ETF, will be one of those super profitable stocks.  People will increasing buy more and more bonds because they know we are near the top in stocks.  Then, when bonds start paying more money than single-digit gaining stocks next year, there will be a great acceleration in bond buying, and stocks will begin their descent even if we don't have a recession.