A New Era In Trading

Extracted from the Jan 22, 2014, Market Update 

Market technicians, contrarians, the average Joe, value investors, etc., etc. are all going to be fooled with the new market system. Why do you ask? The new era is that anything goes.  For example, volume and many indicators’ market technicians used to rely on will give the wrong outlook.  What used to work accurately will no longer work as well or simply not work at all.  This applies to both fundamental and technical analysis. A New Era In Trading is upon us.

As we stated before what is will no longer be and what is not, will be.  One will need to be a modified contrarian or market technician to be able to deal with the swings. The point will be extremes. For example, a contrarian will no longer be able to say because the masses are jumping in its time to jump out.  Instead, one will have to examine the speed at which they are jumping in, how many of them are jumping relative to the volume that was doing nothing just a few months ago, how much-staying power do they have and so forth.  Instead of selling, one would now use this data in the following manner. If the masses are jumping in after sitting out for a long time; it would be fair to assume that they have collected a lot of money while they were sitting on the sidelines.  It would also be fair to assume that they are pissed off that they missed so much of the rally, and it would also be fair to assume that they want to make all the money they lost back and now think they are entitled to in record time.   Given this scenario, then the new contrarian would simply wait for a pullback before loading up and riding the wave higher.  The sentiment would have to reach the boiling point; everyone would need to be foaming at the mouth before the market puts in a long term top.

Based on the trend and our psychological analysis of the situation, we think that the Dow could roar to unimaginable heights before the markets crack and even when they crack they will not break the long term uptrend.   The Feds pulled a Houdini with their unrelenting quantitative easing program, and almost no one seems to have noticed this, or if they have virtually no one is talking about it.   The Dow and SPX put new highs and based on momentum and old technical analysis theory which most seem to have forgotten; a real bull market begins only when the old highs have been taken out.  The long-term trend remains strong so, for now, there is very little evidence of long-term weakness.  A correction of up to 20% is possible. We will probably have two corrections one in the 10% ranges, and one in the 20% ranges both should be viewed as buying opportunities.

Additional Suggestions

If you seek freedom, the 1st task is to attain financial freedom so that you can break free the clutches of the top players who strive to enslave you. They want you to run in a circle like a hamster that runs on a spinning wheel; the hamster thinks the faster it runs the further it will go, but sadly it is going nowhere.

We teach how to use Mass psychology to your advantage, how to view disasters as opportunities and how not to let the media manipulate you and direct you towards actions that could be detrimental to your overall well-being.  Visit the investing for dummies section of our website; it contains a plethora of free resources and covers the most important aspects of mass psychology.

Secondly, subscribe to our free newsletter to keep abreast of the latest developments. Change begins now and not tomorrow, for tomorrow never comes. Understand that nothing will change if you don’t alter your perspective and change your mindset. If you cling to the mass mindset, the top players will continue to fleece you; the choice is yours; resist and break free or sit down and do nothing.

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