The Bad Times Happen When Market Valuations Are Too Rich...Like Now | New Harbor Financial

**John Llodra** (0:00)
We can undeniably say that the US stock market is absolutely in one of the most overvalued, if not most overvalued points in history. The bad times happen when you're in rich valuations. That's always the case, always the case. You can't say exactly when it's gonna happen, but the bad events always happen from very rich valuations.

**Adam Taggart** (0:30)
Welcome to Thoughtful Money, I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here for one of our monthly recaps with the team of advisors at New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners, John Llodra and Mike Preston. Gentlemen, thanks so much for joining me. We got a lot to talk about. Probably, we're not going to talk that much about the war or whatnot, but I do just want to note that there's still a lot of drama going on there with the negotiations, which apparently pretty much seem to have been broken down between the US and Iran.
The US decided not to send its interlocutors to Pakistan. So a lot of question marks around whether the ceasefire is going to end with either a peace deal, the resumption of war. Again, we had an attempted assassination of the president, maybe several members of the administration at the White House Correspondents' Dinner over the weekend. So a lot of craziness going on in the mix here, but markets don't seem to care that much. So John, why don't we start with you? I know you guys have prepared, actually a number of really interesting topics, really about the time-limited strategies for wealth building. But before we get there, let's dial through what the markets are up to.
Big question for you, I guess. A lot of people have right now, John, is should we be trusting this rally?

**John Llodra** (1:57)
Yeah, great to be with you, Adam. Thank you for having us, and thanks to your viewers for tuning in. Yeah, the markets not only have not cared about the headlines, they've actually had one of the most powerful short one-month rallies in recent memory and going back many, many decades. I'll share a chart here just to show viewers what that looks like. This is a chart of the S&P 500 This is a daily chart. Each one of these bars is a day. You can see, well, just a little bit of going back in history. Starting in about October of last year, we had the market start to kind of peter out or just kind of stall out. The broad indices were stalling out. Now, certain sectors like energy and materials were powering higher, but the broad market, partly because tech was starting to stall out. Tech, the big winner of the last bunch of years, started to really struggle in late last year. So the market kind of went sideways, so to speak. And then the war broke out. And of course, we saw the broad market sell off.
March 30th was the low so far in that sell off. And you can see what's happened since then. Almost every single day has been up since then and up big a lot of these days. So we've got a very sharp rally. Now, just getting into a little kind of technical analysis here. These various colored lines are different moving averages. This thick orange line here is the 200-day moving average. So we actually took out that 200-day moving average. The green one is the 50-day moving average. The light blue one here is the 21-day moving average. So all those technical moving averages and various other technical indicators that we follow, basically we're breaking down and projecting a very heavy market.
I'll just comment, we had put options in place for about the month of March and that's what this dotted line is.
Those put options actually went in the money, so to speak. So those hedges were starting to kick in rather robustly. Then we had a very powerful reversal. I'll get into a couple of indicators as to things were getting pretty oversold, so seeing a snapback rally was quite likely.
We have long since taken those put options off and we've obviously been able to enjoy a good bit of this rally higher. But from a pure technical standpoint, everything looks quite positive, a bit overbought. This upper line here is what's called the Bollinger Band. It's a measure of two standard deviations above this 50-day moving average. It's not a perfect science. It's just a way to measure statistically fairly extreme moves in a short period of time relative to some baseline, in this case, the 50-day moving average. So getting a little overbought, nothing too extreme. You can see most times in history, it'll either walk up that moving average or kind of stall out there. So we're kind of in that area, not to be too concerned on the broad market, but quite a dramatic shift in things there. As I said, I have some other things I'd like to pull up just to paint that, but maybe I'll just take a quick pause there, Adam, see if you want to toss in any questions.