For your own safety, I highly recommend reading this email.

Things aren't what they seem...

The moment bulls had been waiting for finally happened this week… On Monday, the S&P 500 gapped high and closed above all-time highs. The market got a bit of help from the Federal Reserve, which announced new rate cuts on Wednesday. The market continued the move higher throughout the week and closed near highs today. From a technical standpoint, SPY -- an ETF that tracks the S&P 500 -- broke out of an ascending wedge to the upside:

Things look rosy for the market, right? After all, what can be more bullish than new all-time highs? Well... here's the thing. All the headlines you're seeing about record levels are really only about the S&P 500. As I've mentioned before, the S&P 500 is a flawed market barometer. First off, the index only tracks the 500 largest U.S. companies, a small pie of the thousands of stocks that trade on American exchanges. Second, the index is weighted by market cap. So on top of only measuring the performance of the largest companies, it has an additional bias towards mega-cap companies like Microsoft, Walmart and Apple. Its largest 10 holdings, for example, account for over 20% of the S&P 500's value. The reality is the vast majority of stocks are not at all-time highs. In fact, only about 54% of all stocks are currently trading above their 200-day moving average. That's lower than the levels they hit during previous swing highs in July and September of this year:

But perhaps the biggest sign that we're not in "bull mode" can be found by looking at small caps. In a normal market, small-cap stocks tend to lead the market higher. They are a risk-on asset, and generally move higher first in bull markets and lower in bear markets. But that hasn't been the case for a long while:

As you can see above, not only are small-caps as measured by IWM, which tracks the Russell 200, nowhere near all-time highs, but they've been stuck in a sideways channel for the entire year. But I'm likely preaching to the choir. What percent of stocks in your portfolio hit all-time highs this week? I'm bringing this to your attention because I don't want you to have a false sense of security. The reality is less rosy than the headlines my lead you to believe. In my opinion, this isn't the time to go all-in to the long side in buy-and-hold portfolios. This remains a traders market. And there will continue to be incredible opportunities to swing trade this market -- to the long and short side. Until we get more confirmation on the direction of the market, you'll want to stay nimble. One last tip I want to give you… Now is the perfect time to protect your portfolio by adding hedges and securities that are uncorrelated to the market to your investment and trading portfolio. Think of it as insurance... you buy it before a catastrophe hits. Recently, I teamed up with Rob Booker to create a strategy that is designed to generate consistent gains, regardless of what the market is doing. The strategy trades currencies and gold (you can learn more about it here). And don't let the fact that it trades currencies discourage you, I promise it's not complicated. In fact, it's as easy as trading stocks and you can do it on whatever brokerage you're using now for stocks and options. And it's worth learning about: It's delivered a 3,845% since 2012. Here's everything you need to know the strategy. Markets are at all-time highs today, but I don't think they'll stay at these levels long. Roger Scott P.S. You know who else don't seem to believe in this recent rally? Wall St. and large institutional investors. You can tell by the amount of volume in the market... we just had a big move to the upside and hit record highs, yet volume was weak. That's a pretty bearish sign. They're not called the "smart money" for nothing. Now is the time to use this strategy.

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