Stock Bull Market over; Mob Psychology disagrees

Stock Bull Market over Mob Psychology disagrees

The current correction is the only one since 2011 that is real in nature, and it could prove to be a precursor to a larger upward move. If you recall, the era, the markets corrected strongly in 1998, it looked like the end was near but then the NASDAQ had its best year ever in 1999. It had tacked on gains of roughly 100%.  The chart below highlights this dramatic reversal.

Stock Bull Market over; Mob Psychology disagrees

Throughout this bull-run, a plethora of reasons has been laid out to indicate why this bull should have ended years ago. Many of the reason laid out are valid, but being right does not equate to successful investing. The markets are not driven by logic; they are driven by emotion. What one needs to do is understand the emotional state of the masses and then one can plan a course of action. The masses are notorious for jumping in late and for jumping out too early. In both instances, their only gain is pain; in terms of money they lose on both sides of the equation.  Be wary when the masses are joyous and joyous when the masses are worried. The trend is your friend and everything else is your foe.

Game Plan

The Fed is on “mission speculate” the end game here is to force as many people as possible to speculate in the markets. How will they achieve this? The mechanism being used is “negative interest rates”. We have moved into the next stage of the currency war games; the era of negative interest rates.  Negative rates will eventually force the most conservative of players to take their money out of the banks and speculate.  This process will be akin to another massive stimulus and will provide the bedrock for another monstrous rally.

Make a list of stocks that you would like to own and use strong pullbacks to add to or open new positions in  blue chip companies or companies with strong growth rates. Some examples are OA, AMZN, BABA, GOOG, RTN, CHL, etc
Additional options to consider

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Mass Psychology, Sentiment Analysis and Trading the Stock Market (Video)

Other articles of Interest:

Lemmings: Herd Mentality & Stock Market losses (Feb 27)

Currency wars & Negative rates will destroy fixed income individuals (Feb 25)

Financial Markets Gripped by Panic & masses stampeding  (Feb 23)

Interest rate wars-Fed stuck between a hard place and a grenade  (Feb 23)

Mob Psychology: Market Crash of 2016 buying opportunity (Feb 21)

People’s QE: Central bankers forcing public to speculate (Feb 18)