Tactical Investor: Mass psychology & Tactical Investing
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Tactical investingThe Tactical investor is the place where Mass Psychology and Technical analysis converge seamlessly in a process we have come to refer to as Tactical Investing. This convergence helps ensure we are on the right side of the markets. Emotions and not logic drive the markets. Emotions are behind every investment decision, even though many traders will vehemently deny this. Mass psychology identifies the emotion that’s driving the crowd, and once that is identified, the trend can be determined. Identifying the trend allows us to get into investments just before they take off.  Technical analysis helps with fine-tuning the entry points, thereby providing us with the opportunity to get into a given investment at the best possible price.

The Tactical Investing methodology combines the most important aspects of Mass psychology with the best of Technical analysis to yield a system that identifies the trend in advance of the event; a clear example of this is the Trend Indicator. Our technical indicators also enable us to identify crucial turning points in the market accurately.  Over 85% of the plays issued have trended higher.

Tactical Investing in it’s simplest form equates to being on the right side of the markets at the right time. To ensure we are always on the right side of the market, we incorporate the four elements (shown in the infographic) into our analysis.    Employing this methodology gives us an advantage that very few systems can boast; we can spot trend changes in advance of the event.

 Tactical investing & Mass Psychology converge seamlessly

 

On the surface, it appears that bearish sentiment has dropped, albeit slightly and that individuals are somewhat less bearish. Take a closer look; the bears jumped into the neutral camp as neutral readings went up from 27 to 29.  We have a real version of musical chairs being played; only in this instance, the wrong move could cost one a fortune.  Neutral readings have more or less remained constant since the markets bottomed. What is worse than fear? Uncertainty. At least when you are fearful, you have something to focus on. When you are uncertain; you are like a Yo-Yo swinging from one side of the fence to the other. The longer the crowd remains sceptical, the higher this market will run. If we had to make what is sometimes referred to as an educated guess, it is all but certain that the Nasdaq will trade to and past 15K. Market Update Sept 30, 2020 

On the same token, the reason so many Magellan fund subscribers lost was that they were trying to outdo Lynch. They sold when the going got tough and purchased the fund when everything looked rosy; the perfect recipe for destruction.   So, what can we gather from this? That no matter how good the fund managers are, stupidity trumps logic.  Investors allow emotions to enter into the equation; the decision to buy is based on greed, and the decision to sell is based on fear. In essence, the odds of winning when employing such a strategy is virtually zero. Market Update Sept 20, 2020

The saying don’t fight the Fed has never been more accurate; this Fed knows no limits. We can tell you right now that they will go as far as to purchase stocks directly to support this market. So, don’t fall for the sky is falling hype, for we have a Fed that is hell-bent on destroying anyone that dares to challenge them. You are going to see some big names get destroyed before this bull is over as these big names in their infinite wisdom will decide to take on the Fed and as expected the result is that they will end up dead as in dead broke. Market Update July 12, 2020 

Helicopter money is here, and nobody is complaining about it, in fact, they want more and more. It may seem surreal to those that have some semblance of common sense left, but at this stage and for several years to come, nobody is going to give a damn about the national debt. Market update July 12, 2020

So, whatever rubbish they pump out in the news, this pullback will resolve itself sooner than later because the Fed and its allies will either come out with new policies to push more money into the markets or directly intervene by supporting the financial system.  Market Update June 12, 2020

No market can trend in a straight line so on a point basis, the longer the Dow takes to pull back the stronger the correction. Initial data is suggesting that the days of minor corrections are over. We could be in for a new era in terms of market moves; sharp down days followed by even sharper reversals. Hence, the overall theme should be to view every sharp pullback through a bullish lens. Interim market update June 6th, 2020

There has never been a period where bearish sentiment has remained negative for weeks on end while the markets continue to soar without letting out any steam. This insane intervention by the Fed also informs us that this bull will indeed soar to unimaginable heights. It could very well end up becoming the modern version of Tulip Mania.  Market update May 31st, 2020

So, prepare yourself mentally to deal with sharp gyrations from time to time, for the rewards will be huge. We are now in a different market, technical analysis, fundamental analysis, and any type of single analysis will fail. This is psychological warfare of the highest order. The order is to change the masses perception with such subtleness that they will think and believe they arrived at a conclusion that was already chosen for them.  Market Update May 31, 2020

It appears that markets are experiencing the “backbreaking correction” one which every bull market experiences at least once and is often mistaken for the end of the bull.  While it feels like the end of the world, such corrections always end with a massive reversal.  Given the current overreaction to the coronavirus, there is now a 70% probability that when the Dow bottoms and reverses course; it could tack on 2200 to 3600 points within ten days.   Central bankers are already talking about another version of shock and awe to boost the markets as they did back in 2009.  https://yhoo.it/2W4r9GVAs we stated before the goal is to lower interest rates and debase the currency and hence one can expect many shock and awe programs. Interim Update March 9th, 2020

 

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A sharp pullback is still an outcome we view through a very bullish lens. The ideal setup calls for the Dow to trade to the 28,800 to 29,000 ranges, with a possible overshoot to 29,300. After that, a nice sharp pullback would set the bedrock for a surge to and possibly well past 30k.  Market Update Dec 29, 2019

We have a stunning development the combined score of netural and bearish sentiment has surged to 80 and that is extremely telling. Consider that we are trading several 100 percentage points away from the 2009 lows and the masses are almost as scared as they were back in 2009. If the markets were to crash it would be the first time in history a bull market ended on a note of uncertainty.  History is never kind to the crowd and we don’t think that picture will change in the near future. Market Update Oct 10, 2019

When the trend is positive (UP) train yourself to view strong pullbacks, corrections and other negative developments through a bullish lens. Anyone can panic in the face of trouble, but only the astute individual can stand still and direct their energy to spotting opportunities. Don’t do what the masses are trained to do, for, after all these years of panic, they have nothing to show for it. Market Update Sept 15, 2019

The Dow has now dipped below 27K (on a monthly basis).  We see no reason to worry; investors should continue with their daily lives and focus on the things that make you smile or leave you in a peaceful state. Remember, today’s news is nothing but weaponised propaganda and weaponized news is here to stay.    Tactical Investing Market update July 31, 2019

To embrace the “trend player” methodology, one needs to clear one’s mind from all the nonsense injected via the Mass media. Secondly, change the way they used to trade, and lastly, they need to understand that it takes time. Depending on how open-minded one is; the average turnaround time falls in the 4-12 week range period.  Remember that nothing good comes easy, and more importantly, this change will be permanent. One will know how to fish instead of always waiting for a handout.  Tactical Investing  Market Update July 24, 2019

Bitcoin is finally showing strength, it has managed to stay above 3900, and this suggests that a bottom could be in for the year.  There is an active zone of resistance in the 5850-6150 ranges. If it can manage a monthly close above $6150, then it will be in a position to test the 6900-7200 ranges with an overshoot to the 7500-7740 rangesMarket Update May  7, 2019 

In such an atmosphere, the main thing you should focus on is on the trend; if the direction is up, then use pullbacks ranging from mild to wild to add to your long positions.  Hence do not let panic enter the equation if the market experiences a minor or strong pullback unless the trend changes and the trend is showing no signs of breaking.  With V readings in the super Ultra-high ranges, traders should be prepared and ready to deal with volatile market swings.  Until the trend changes, those shorting the markets are asking for trouble unless they are ready to move very fast.  Market Update April 13, 2019 

So far in 2019, the number of individuals in the neutral camp has always surpassed those in the bullish or bearish camps, and this is very revealing. It clearly indicates that the masses are suffering from a long term bias and that the political landscape is messing with their ability to distinguish reality from fiction. Market Update March 31, 2019

This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market give or take a few months; after 2009, the game plan changed and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as did before 2009 and in many cases would lead to a faulty conclusion. Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one. Market Update Feb 18, 2019

 The trend is up and showing no signs of weakening. Therefore we must treat anything the media attempts to market as a disaster, as an opportunity factor. The media is an extension of the mass mindset. For any con, you need at least two elements, a con artist and a bunch of idiots. An observer is not part of this equation for he/she does not equate with the conman or the idiot, the observers function is to observe, and then use the data to plot the most favourable path. Tactical Investing Market Update Feb 28, 2019 

90% of advisers, experts, financial commentators do not know what they are talking about, which means the same rules apply to the masses. Want proof look, go back and look at how they repeated the same nonsense each time the markets were crashing and or surging upwards. They screamed that the world was going to end when the markets were pulling back, and they alluded that the Milky Way was the next stop for the bull market when it was rising. In both cases, they failed to spot the so-called top or the bottom. Why do you need someone to tell you the obvious, do you need a jackass to tell you that the markets are crashing, when it is all but evident and vice versa. The only function these media wenches/experts serve is to inject emotion into the equation; make the masses sing right at the top and make them panic right at the bottom.   Tactical Investing Market Update Jan 14, 2019

The average trader has a convoluted view of the markets and the world. They are forever willing to bend the definition of risk and opportunity to suit whatever perspective is taking the lead role at the moment.  When prices are low, they assume that it is the wrong time to buy because they are bound to go lower, and when they are soaring upwards, they assume that it is the right time to buy because they are bound to soar even higher. The concept of risk to reward is thrown out of the window; they state they seek an opportunity with low risk, but their actions speak otherwise.  No Bull Market has ever ended on a note of fear; they end when the crowd is in a state of ecstasy.Tactical Investing Market Update Nov 26, 2018 

Ironically, in times of risk, the masses seek to take on more risk as opposed to taking on less risk. The masses beg for the opportunity to buy low and sell high, but when the moment finally arrives (and the risk factor is much lower) they baulk, and their argument is always the same “it is different this time, the market is going to crash, and we need to bail out”. However, they never put forth the same argument when the markets are racing upwards, and analysts all over the place are issuing insane targets such as $1 million (high-end price for Bitcoin, at which point we stated a top was near at hand), and they blindly assume the next stop is the sun or the next galaxy. Instead, the next stop is usually “hell”.   Market Update Nov 26, 2018

Remember polarised people are the easiest individuals to manipulate and deceive. Ultimately, higher rates of polarisation could be very beneficial for the markets. Tactical InvestingMarket Update July 8, 2018

Despite all the drama over the past ten days (since the last update), the markets continued to trend higher, and the Nasdaq is putting in new 52 week highs, so much for the naysayer’s argument that this market was set to crash.  If the Nasdaq is already surging to new highs, it indicates that there is a lot of extra cash sitting on the sidelines.  Because the other indices are not trading at new highs and not all the money is directed towards the Nasdaq.   It also tells us that there is a boatload of hot money waiting to be unleashed into the market; fools generally control hot money, and fools never lead the way up, they always follow.  Market Update June 23, 2018

Oil is rising; the dollar is trending higher, silver is putting in what could turn out to be a very explosive pattern, and the US bond market is issuing mixed signals. It sounds like everything is out of sync, and that’s exactly why it’s not. The bull market is not dead, and the trend is showing no signs of turning negative. In short, if this pattern continues and our indicators on the monthly charts move into the oversold ranges, then Dow 30K  is virtually a done deal.Tactical Investing Market Update May 22, 2018

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The bull market is not dead that is the most important thing we want everyone to get from this update. If it were dead, we would be making alternative plans.  The best signal that the bull market “is not dead” comes from the number of pending plays; if this bull market were dead, we would have very few plays on this listThe mass mindset is wired to react emotionally, and therefore it’s destined to fail.  Market Update April 30, 2018

 As long as the trend is up, every pullback is a buying opportunity; that’s what you should focus on. Market Update Jan 16, 2018

We believe in the adage that an ounce of prevention is worth pound or several kgs of cure. We focus primarily on Mass psychology; technical analysis plays a secondary role. Mass Psychology is telling us that its time for defensive action.  We are going to opt for safety instead of glory.   Bullish readings indicate the masses are now very happy and to ignore that development would be foolhardy. Market Update Jan 8, 2018

For the first time in almost two years, the bullish sentiment has soared past the 50% mark, and the combined score of the bears and neutrals has dropped below 50%.  This could be the first signal indicating that the markets might experience a correction in the 15% plus ranges in 2018. We will continue to monitor the situation closely.  We are going to be the first ones to tell you that if this comes to pass it’s going to be helluva of buying opportunity. Tactical Investing Market Update Dec 28, 2017

The bitcoin mania will end badly one day; the masses can never win, just remember that. It might sound sad, but that’s not what we focus on, we focus on trends and reality. Market Update Dec 17, 2017

It appears that a new trend in motion is starting to take hold in the sentiment arena; we are witnessing wild swings in sentiment.  This week we have experienced another wild swing; bullish sentiment soared to 44%; it’s quite a big move from the last reading.  We expect this trend to gain momentum going forward. Until the bullish sentiment surges past the 60% mark for several weeks on end, the markets are more likely to correct than crash. Market Update Dec 17, 2017

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This whipsaw action we have witnessed for the past few weeks is here to stay; this is the beginning of a new trend. It also suggests that no matter how strong the next correction is; it will prove to be a buying opportunity and not the start of a bear market. No bull market has ended on a note of uncertainty.  Market Update Nov 31, 2017

On the weekly charts, the Nasdaq is still trading in the oversold ranges, so it has room to run-up. Tactical Investing Market Update Nov 31, 2017

Despite trading in the overbought ranges, the Nasdaq has room to run before it hits the extremely overbought ranges and it is likely to trade in the insanely overbought ranges before it pulls back.    Market update Nov  2, 2017

 

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The Tactical Investor does not give individualised market advice. We publish information regarding companies in which we believe our readers may be interested and our reports reflect our sincere opinions. However, they are not intended to be personalised recommendations to buy, hold, or sell securities. Investments in the securities markets, especially options, are speculative and involve substantial risk. Only you can determine what level of risk is appropriate for you. Continue to read the disclaimer in full 

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 If one combines the concepts of Mass psychology & Tactical investing the results are usually spectacular. It’s the best way to invest for the long term.