Why I’m Still Bullish on this Market

After a bumpy start to September, the stock market is rocking and rolling now. In fact, today, the Dow soared more than 400 points on the news that the U.S. and China are tapping the brakes on their trade spat, as both sides agreed to continue negotiating in October.

This is a smart call on China’s part, as any retaliation would have only escalated the trade spat.  Remember, this skirmish has really hurt China, as it’s been forced to devalue its currency. Meanwhile, the U.S. dollar only continues to strengthen.

Now, while the U.S. and China prepare to hammer out the details, I remain focused on investing in the stock market. It’s still the best place to grow your wealth – even on the down days.

I explain in full detail why I’m so bullish on the stock market in tomorrow’s September Breakthrough Stocks Monthly Issue, but let me say this now: Recently, the S&P 500’s dividend yield rose above the 30-year Treasury yield. The last time this happened was back in 2009, and a massive stock market rally ensued. In fact, you may recall that the S&P 500 has nearly tripled since its lows in March 2009.

In the current environment, stocks are once again grossly undervalued relative to Treasury yields—and as a result, the S&P 500 could triple again over the next decade!

Consider this: Assuming minimal earnings growth from the S&P 500 relative to a 1.5% yield on the 10-year Treasury, the S&P 500 should trade at 66 times its trailing 12-month earnings. Currently, the S&P 500 is trading at slightly less than 22 times its trailing 12-month earnings and 17.9 times forecasted 2020 earnings. So, based on both trailing and forecasted earnings, the S&P 500 could triple based on ultralow Treasury yields alone.

Now, right here in September, there are three significant events that should get the market to start firing on all cylinders.

One is the U.S.-China trade negotiations. Chinese President Xi has a goal to dominate five industries by 2025, but China may not achieve this goal with President Trump escalating the trade and intellectual property fight.

Recently, President Trump encouraged companies to change their supply chains. Despite these trade tensions, I wouldn’t be surprised if both President Xi and President Trump ink a new trade agreement that benefits both parties.

So, today’s big rally is an excellent example of what happens whenever something positive about the U.S.-China trade war is announced: Wall Street cheers and boosts stocks higher.

Looking forward, the other two significant events this month are quarter-end window dressing and the decline in energy prices…BUT you’ll have to get tomorrow’s September Breakthrough Stocks Monthly Issue to find out why.

There are currently 24 stocks on my Breakthrough Stocks Buy List, and I am excited to announce that I will be adding a 25th in tomorrow’s September Breakthrough Stocks Monthly Issue. It has seen double-digit year-over-year revenue growth and triple-digit year-over-year earnings growth in the most-recent quarter, and I don’t see its momentum slowing down one bit.

So, to get in before this stock takes off, I recommend that you sign up now so you can get the name tomorrow. Time is running out, because as after September 16, the next big buying window won’t be until earnings season kicks off in October. And if you want to take advantage of the big rally that should kick off on the backs of the three significant events this month, now is the time to invest. You can click here for all the details.

Note: With three big catalysts in the works (and one already beginning to play out), I see plenty of upside ahead.

There is one major issue, though: The stock market leadership is growing narrower. But, that’s not a problem for my Breakthrough Stocks. They are characterized by 26.6% average forecasted sales growth and 27% average forecasted earnings growth. The analyst community has also revised earnings estimates 3.6% higher in the past month. So, I expect many of our Breakthrough Stocks will break out in the coming weeks.

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