The Non-Dollar Report View in browser Saturday, May 2, 2015 Crack the Market With This "Cheat Code" Access to similar information already helped one investor capture a $100 million payout during the middle of the financial crisis. Another used it to flip $11,000 into $42 million in less than two years... a world record for trading gains. And the nine-time winner of the U.S. Trading Championship confesses, it "works better than any tool I have." Now one man's unusual (and incredibly profitable) discovery has been revealed to regular investors. Find it here. Guilty of Loving Too Much by Eric Fry How do investors love U.S. stocks? Let me count the ways... 1. The most recent reading from sentimenTrader's "Rydex Fund Flow Indicator" shows that investors are even more enamored with U.S. stocks today than they were in early 2008, just before the stock market began an epic collapse that would obliterate more than half its value. 2. The most recent reading from the Market Vane Bullish Consensus, compiled by tracking daily "Buy" and "Sell" recommendations of leading market advisors, shows that 68% of stock market advisors are bullish. That's within a whisker of the highest bullish percentage since May 2007. 3. The CBOE Volatility Index (or VIX), also known as the Fear Gauge, is within a whisker of its lowest readings of the last six years. In other words, investors have become relatively fearless and complacent, which is not a favorable portent for the stock market. The VIX measures the implied volatility of certain stock option contracts. As such, it measures the relative fear or complacency of options traders. When the VIX reading is high, options traders are very fearful, which is usually an indication that stocks will soon begin to rise. But when the VIX is very low, as it is currently, options traders are relatively complacent, which is a danger signal. 4. The Investment Company Institute's Equity-to-Money-Market-Asset Ratio has soared to its highest (most optimistic) reading in the 30-year history of this indicator. "Each month," sentimentTrader.com explains, "the Investment Company Institute releases information related to the mutual fund industry. Included in this data is the total amount of assets invested in mutual funds, ETFs and money market funds. "As a rough measure of investor sentiment, this indicator looks at the total assets invested in equity mutual funds and ETFs and compares it to the total assets invested in the safety of money market funds. The higher the ratio, the more comfortable investors have become holding stocks; the lower the ratio, the more uncertainty there is in the market." 5. NYSE margin debt has never been greater in the 83-year history of this indicator. In other words, investors are not merely buying stocks with both hands; they are buying stocks with both hands and with whatever additional funds they can borrow. Again, we turn to sentimentTrader.com for a concise explanation: A customer may borrow funds from a brokerage firm. The brokerage firm will not do this unless the customer has existing collateral (i.e. stocks) in the account against which the customer can borrow. The customer can do with the cash whatever they wish, such as withdrawing it from the account to pay for a vacation, but the purpose most often used is to buy additional stocks... If the customer uses the borrowed funds to buy more stock, and the stock goes up, then the customer can realize gains much greater than they would have if they were not leveraged, since they are now holding more shares. Of course, this works both ways - if the stock declines, the customer will lose more than if they were not leveraged, and if it falls far enough and there is not enough equity (collateral) in the account, the brokerage firm can call the loan in by giving the customer a margin call. The brokerage firm has the right to sell enough stock in the customer's account to cover the amount of their loan, even without the customer's consent. This forced liquidation of margin accounts can spur further stock market declines as firms rush to protect their capital. Increasing margin levels are not necessarily a problem - in fact, it can actually be a good thing for the market. However, it is when margin levels reach extreme levels and begin to taper off that we need to be worried about substantial market declines. Correct. Rising margin levels can be "a good thing" as long as they are rising. And so far, margin levels have not begun to taper off. They are merely at extreme levels... waiting to taper off. Obviously, no one sentiment indicator signals the top of a bull market. But when many different indicators are flashing amber at the same time, investors would usually do well to trim their risks a bit. We don't know if or when the U.S. stock market is about to take a serious tumble. All we know is that... U.S. stocks have been running hot for several years. U.S. stocks have not suffered a single 10% correction since 2011. U.S. stocks are not cheap. Despite these facts, the stock market might continue chugging along for a while. But we don't like the odds. So we would repeat what we suggested on March 17: "Sell short the SPDR S&P 500 ETF Trust (NYSE: SPY) and then buy an equivalent dollar amount of the SPDR Euro Stoxx 50 ETF (NYSE: FEZ)." Alternatively, you could sell some of your richly priced U.S. stocks for richly valued U.S. dollars and take a vacation to Europe. Think about it. Good investing, Eric J. Fry Founder, The Non-Dollar Report Law of Money Flow Just like in nature, the stock market follows specific "laws." Like when earnings rise, share price follows. Or the more volatile a stock is, the more risk is involved. Today, we're sharing a new rule... one that allows you to focus ONLY on stocks going straight up. Click here to find out more. Click here to comment RECENT ARTICLES THE DOLLAR'S GOT A BROKEN NECK by Sean Brodrick April 30, 2015 The U.S. dollar is in serious trouble. But I think this is a great opportunity to trade some richly valued dollars for some lowly valued gold and silver mining stocks. Read On... IF YOU LIKE GOLD, BUY SILVER MINERS by Sean Brodrick April 28, 2015 Are you looking for the fastest-growing gold miners in the world? Then you might want to buy a silver mining company. That's right, silver miners. Read On... THE SPROTT HEARD ROUND THE WORLD by Eric J. Fry April 25, 2015 Unlike most other investments, gold does not merely fall out of favor; it tumbles into revulsion. But Sprott's takeover offer for Central GoldTrust is one small vote of confidence for the beleaguered precious metals sector. Read On... You are receiving this email because you subscribed to The Non-Dollar Report. To unsubscribe from The Non-Dollar Report or to manage your account, click here. To cancel by mail or for any other subscription issues, write us at: The Non-Dollar Report Attn: Member Services 14 West Mount Vernon Place Baltimore, MD 21201 © 2015 Beyond the Dollar LLC All Rights Reserved 14 West Mount Vernon Place | Baltimore, MD 21201 North America: 1 877 880 9290; Fax: 1 410 329 1923 International: +1 443 353 4461; Fax: +1 410 329 1923 Question? Comment? Contact us here. Beyond the Dollar is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. 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