The Tactical investor is the place where Mass Psychology and Technical analysis converge seamlessly to keep you on the right side of the markets
Emotions are the driving force behind every human action, so understanding what the masses do and how they think is imperative when it comes to trading and long term investing. Market Sentiment Analysis is key to determining long-term trends. Stock market crashes or strong corrections should not be feared as long as the trend is positive; they should be embraced for they provide the astute investor with the opportunity to purchase grade A stocks at a significant discount.
Instead of trying to predict where the Stock market is headed, the emphasis should be on studying the herd. It is the change in the herd mentality that dictates what the market does. The reason most fail in this endeavour is that they do things backwards, they treat the market as a separate entity and try to find out what it is doing and then determine what the crowd will do. When in fact, what they should be doing is looking at the crowd and then using the information to determine how the market will react. It is the group/crowd that drives the market. A market soars to new highs or crashes to new lows because of the way the masses are interpreting the situation. How can you predict something if you are not looking at the source? Human beings are the most illogical of all animals. Despite having the power of reason and logic, they are the only creatures on this planet that will go out of their way to make sure they are in harm's way. When you understand the mass mindset, trying to time the markets takes on a whole new meaning. This is why at the Tactical Investor, we dedicate an inordinate amount of time to studying the herd; we want to know what they are doing, why they are doing and if the Market sentiment has reached a boiling point or not. This data can be coupled splendidly with technical analysis to render a clear image of what is going on in the markets
At the Tactical Investor, our focus is not only on Technical analysis, for technical analysis spots the symptoms of the disease, but it does not identify the cause. The trend indicator blends the best elements of Technical Analysis with the relevant field of Mass Psychology as understanding the Market Sentiment plays a key role in identifying future trends. Our investment philosophy is very simple, identify the direction and stick with until it ends. We could list a plethora of reasons as to why you should join our service, but instead of doing that, we will let our past calls speak for themselves
Our prevailing theme towards the dollar was that all sharp pullbacks should be viewed as buying opportunities and that outlook continues to hold. Market Update July 2, 2016.
Market Sentiment data reveals that the majority are still in the anxiety zone; they believe that this market should have crashed long ago and are waiting for a crash like an event to say I told you so. Bears and neutrals add up to 77% this week; a number that’s simply too high for the markets to crash; a sharp correction is always a possibility, but the odds of a crash are low. Markets never crash when the crowd is uncertain, and those in the neutral camp are usually the most confused players out there. We would gladly welcome a substantial pullback. Market Update July 2, 2016.
If you repeat the same thing over and over again, eventually you are bound to be right. The markets as we stated are now ripe for a pullback; whether it will be strong or mild remains to be seen. Pay attention to how the experts react when the markets start pulling back; will they react in the same way, or will some of them change the song slightly. Market Update June 18, 2016
Even in negative rate environment the dollar could hold up well and end up being one of the strongest looking currencies out there. However, this strength is an illusion; it will appear strong against weak currencies. In a room with a thousand idiots, is the smartest one of them a genius or is he an idiot who thinks he is a genius? Hence, the strength here is relative; one way to tell the strength is illusory in nature is to observe the speed at which equity markets and other assets rise in price. We expect the stock market to bolt like a bandit being chased by the hounds of hell when negative rates hit the U.S. Market Update June 2, 2016
We would rather focus on why this bull market is not ready to crash. Yes, we have already repeated this in one form or another dozen of times, so today we will sum it up in two sentences. People expect the market to crash as Market sentiment is rather negative and hence it won’t. Our trend indicator is positive, and we have not seen a market crash when this indicator is bullish; that’s it. The trend is up, so at this point, we have to wait patiently for the markets to let out some steam or for our long-term indicators to move into the oversold ranges. Patience is a virtue; stupidity and greed are not. Market Update June 2, 2016
Our updates are spaced out so as to enable our subscribers to focus on the trend and ignore the noise; we live in an era of information overload, and too much information is just as bad as no information, especially if the information is faulty. Market Update June 2, 2016
Potentially the dollar could still drop to the 90 ranges, though the possibility of that is now less than 35% as the pattern has strengthened since the last update. The more likely outcome is for the dollar to test the 92.80-93.00 ranges before trending higher. If 90 is hit, we will jump up in joy, but we will not sit and pray for that event. A bullish cross from our Custom MACD’s will indicate that the dollar is ready to test it’s old highs again. Market Update May 17, 2016
This week’s Market Sentiment information is even more interesting; the number of individuals in the neutral camp soared to 50, and the number of bulls dropped to 22%. This is taking place when the markets are trading very close to their all-time highs. This shows you how badly this bull market is understood and why it is destined to trade a lot higher. We now have 78% of individuals that are either bearish or they are bears that lost their teeth or Bulls that lost their cojones. There is nothing to add here but repeat the obvious; the stronger the pull back, the better the opportunity. Market Update May 17, 2016
Oil is still expected to trade to the $50-$55.00 ranges, with a possible overshoot to $60.00 by year end. The ride up is expected to be volatile. Market Update May 2, 2016
At this stage of the game, we would ideally favour a nice strong pullback, or the 2nd option is a consolidation that pushes our indicators back to the oversold ranges. Our indicators on the monthly charts continue to trade in the oversold ranges; yes you heard right oversold ranges. A bullish signal from them will clearly indicate that the markets are gearing to explode upwards. As one Wiseman once stated, “an ounce of patience is worth a pound of brains.” In this instance, patience is called for.
It remains unchanged from last week. The stronger the deviation, the better the buying opportunity Market Update May 2, 2016
We have seen wild moves in the market if you look at the Dow from August of 2015 to the present it has traversed over 7000 points in a span of roughly seven months or 1000 points per month. And this is only just the beginning of what lies in store regarding market volatility. Naysayers will have you believe it’s terrible, but in reality, it provides the astute investor with numerous opportunities of purchasing top companies at a bargain and selling them at a nice profit down the line. All we need to do is differ to our trend indicator if it's trending upwards, then every single correction/pullback is a buying opportunity Market Update April 4th, 2016
The Dollar has been consolidating since March of 2015, and we might add that it has held up very well during this stage. Ideally, it would drop down to the 92.00 ranges, which would push all the indicators into the extremely oversold ranges and provided the trend remains neutral or turns positive, one should expect a very strong turnaround. The trend is showing no signs of turning negative yet. Market Update April 4th, 2016
There is a theme that states one should sell in May and go away, as we are in a new paradigm, that theme might change to sell in May and be carried away. As the markets are extremely overbought, the more probable scenario calls for a pullback in April and then a strong summer rally which could take hold as early as May. Market Update April 2, 2016
The economic data indicates all is not well, but the markets nevertheless brushed this news aside. Please pay attention to the fact of how important it is to take the opposite stance to the masses when it comes to the markets, provided the trend is up. We have shown everyone in real time (not some hypothetical matchup) since July of last year that it pays to drink, celebrate, jump in joy or relax when the masses are panicking and to do the opposite when they are euphoric. Panic is a useless emotion. Market Update March 21, 2016
As usual, the masses lapped all the negative headlines and were left holding an empty can. Remember that the mass mindset is very dangerous when it comes to trading the markets. Life is short, but if you think like a cow, it’s even shorter. Wake up or walk happily to the slaughterhouse. Market Update March 21, 2016
Throughout all this wailing and gnashing of teeth, we have stuck through with the same theme; the larger the pullback, the better the buying opportunity as long as the trend is up and that plan has paid off. What will you do if the markets pull back strongly again? Yes, that is right, you will break out a prized bottle of wine, liquor or any other tasty toxin you favour and celebrate while the masses wail and scream death to the markets. In this world there are only two options, do or be done in. Interim Update March 14, 2016
Appears to have bottomed out in February as projected and now that it is trending higher, one of the so-called negative omens has been removed from the market. Oil is projected to continue trending higher for the rest of the year; this upward move will be interrupted with rapid corrections. In other words, the ride up is not going to be smooth. Interim Update March 14, 2016
However, the current pullback has scared the hell out of a lot of bulls and pushed a bunch of individuals from the neutral camp into the bearish camp. And this is a positive development; once the market puts in a firm bottom a tonne on individuals will jump out of the bearish camp into the bullish camp and equally large number will jump out of the neutral camp into the bullish camp.Every single one of our gauges is now in the extreme ranges indicating that panic is rampant and that everyone expects the markets to crash, the world to end and all hell to break loose. Let them carry on with these mentally disturbed thoughts; you have better to things to do than listen to a bunch of loony bins spew streams of nonsense. Market Update Feb 17th, 2016
The trend has still not turned positive, and it looks like a test of the lows is still in the works. The SSEC could probably rally to the 2950-3000 ranges before pulling back again. On a positive note, the trend is dangerously close to moving into the neutral range; this would be a positive development. Market Update Feb 17, 2016
The SSEC did rally to the 2900 ranges (2928 to be precise) before pulling back, and it is now set to test the lows again.
Notice that the $30.00 price point level has held on a monthly basis. Oil has not closed below this important level on a monthly basis for two months in a row, and this has to be viewed a very bullish development. Our overall view is for crude oil to trend higher with the possibility of trading past the $55.00 ranges. Market Update Feb 29, 2016
After trading as low as $27.56 oil reversed course and headed higher, it is now in a transition phase; moving from a down trending phase to a bottoming phase. Oil did not close below $30 on a monthly basis, so the outlook has not changed. The current bottom has all the signs of a fake bottom, meaning that it is probably a setup for the early bulls. Oil is likely to test its lows once again before a bottom takes hold. A bottom could take hold in the month of February. Oil, however, cannot close below $30 on a monthly basis, if it does, then the bottoming process could be delayed. Market Update Jan 31, 2016
It felt good to celebrate in the face of panic and brush fear away like a pesky fly. If you did take this path, congratulations are in order as you are now marching to our own drumbeat and not to another’s. Always remember, the masters of deception, thrive on fear. Fear is actually very good if you are not on the receiving end. Once you learn to control this useless emotion, it can help you make a lot of extra money over your lifetime, and it can also help you lead a much better life. If you have children educate them now, and inform them of how dangerous and worthless this emotion is, if one gives into to it. Market Update July 17, 2015
Indeed, the late bulls were skinned alive, and you can still hear their bellows; the bloodletting is not over. The markets (Shanghai Index) will rally for a bit and then there should be one more down leg, to snap the backs of the semi-strong bulls. From a long-term perspective, we see nothing to worry about; everything is taking place as envisioned. The long-term trend is still up. Wait for some more blood to be spilt on the streets before taking larger bites. Market Update July 17, 2015
When you think logically and or use old parameters to gauge this market, every single bone in your body probably screams out that this market should crash and burn. That is true, but what is also true is that as nothing is real, logic has no place when it comes to the illusory. How can you use logic (which is based on using real and compelling data) to judge an event that is illusory in nature? Every statistic imaginable has been, is being or will be manipulated to satisfy whatever picture the manipulators want the masses to believe in. It takes two to tango, one to cry and three to have a party, thus the crowd is as complicit in this game as are the manipulators. The most likely outcome is that the markets will trade higher than anyone expects as long as the trend remains up. Market Update May 31, 2015
The markets have continued to soar higher and higher, much to the surprise of both the bears and the bulls. As we stated in the last update, nothing makes sense when examined from a logical point of view. However, as far as this market is concerned, logic and reality are two traits that will only hamper you and lead to losses. The individuals behind the scenes are working on the premise that they can recreate reality and so far, it appears to be working like a charm. Interest rates will be held in check until the very end, whenever a reason surfaces to justify a rate increase, some negative news will appear shortly to make it appear that a rate hike is a bad idea. When you control the bad and the good news, you control the outcome of the game. As the NASDAQ just recently broke a 15-year barrier, it appears to us that the NASDAQ should at least soar another 2000 points if not more. Remember a spring that has been held back for so long (and 15 year is a long time), uncoils with twice the force that held it back. Market Update May 17, 2015
When you control the bad and the good news, you control the outcome of the game. How high will this market soar? Well to issue very long-term targets would be a waste of time as the situation is very fluid; meaning that this market will go as high as the masses allow it to go. Market Update May 17, 2015
The Feds will not raise rates until there are literally facing a double barrel shotgun and even then they will wait until the last minute to act. This effectively means that this artificially low rate environment could be maintained for some time. As long as this is the case, they will find a way to push money into the markets. Remember extremely low rates combined with inflation (money becoming more worthless each day) will eventually push even the most conservative player into the market. Market Update May 6, 2015
What we need to focus on is that the underlying theme is “inflate or die”; this means that the currency race to the bottom is on maximum overdrive. In such an environment, it would be foolhardy to take a different approach that would entail pain. Individuals in the West are not like their Russian counterparts; they are not ready, and they do not have the experience of dealing with hardships. In such an environment where the only weapon central bankers have is to flood even more money into an already overextended financial system (this phenomenon is not a localised phenomenon but a global one for the most part), every healthy pullback has to be viewed as buying opportunity. Moreover, extremely strong pullback has to be viewed as a screaming buy. Market Update March 31, 2015
We have infinite reasons and then some as to why this market should crash and burn. Ebola, slowing economic growth, the Ukraine/Russian crisis, the possibility of a default by Greece, a supposedly slowing housing market, the possibility of a Euro recession, a slowing down of the Chinese economy, the fact that the Yellen in her infinite wisdom might raise interest rates, and let’s not forget ISIS. So the bears and naysayers have plenty of ammunition to spin a plethora of horror stories for the gullible masses. On the same token, the Bulls also have a boatload of rigged information to support their deranged theories. However, the only thing that matters today is not what is going to happen, what has happened or what might happen. The man who controls the money supply (in this case woman) is the one that control the direction of the market. All the other stuff well it just makes for good chatter. When you have absolutely nothing better to do and are bored out of your mind then you can subject your mind to this fetid gobbledygook. If you are a smart person, then you should read the views from the potato heads/penguins/brain surgeons (or otherwise known as experts) when you are looking for a good laugh. Overall, these tools are affirming the trend; therefore, all pullbacks must be viewed as buying opportunities. Market Update Feb 28, 2015
The Penguins were all over the place. We advised conservative players to adopt a neutral position and aggressive players to use strong pullbacks to open new positions and this worked out relatively well for the respective groups. . However the weekly trend is up again, so the outlook is bullish once more. All strong pullbacks should be viewed as buying opportunities. The monthly trend is issuing a conflicting signal, but our focus is not the monthly trend but the weekly trend. If the monthly trend does not change, it simply means that the weekly trend is going to turn bearish over the next few months, but until it turns bearish we will remain bullish. Market Update Feb 18, 2015
The trend is mixed, some penguins are screaming the market will crash, others are saying it will fly. We are stating that the trend is not clear, but as it has not turned negative, the outlook favours a move higher and the old highs could be possibly tested. This will hold true until the weekly trend turns negative; the moment it turns negative we will send out an Interim update. Market Update Jan 31, 2015
The dollar easily traded past 93.50 and surged to our upper-level targets, when it surged to 95.85 (just a few points shy of 96.00). As the trend was up (and that overrules everything) we specifically stated that there was nothing stating that the dollar had to pull back and that is why we stated all pullbacks should be treated as buying opportunities. The weekly trend is still strong so the overall outlook still calls for higher prices. The daily trend is down and so we can expect a possible test of the high 93 ranges to low 94 ranges; this is not guaranteed, but it’s quite possible. What we do know is that all pullbacks should be viewed as buying opportunities until the weekly trend turns negative. This means that the euro still has more downside. Individuals are softly humming the hymn “kumbaya my love” and with the passage of each day the volume will rise until everyone is screaming this silly hymn from the top of their lungs. At that point, the dollar will put in a multi-decade top. Market Update Jan 31, 2015
The weekly trend is still positive, but showing signs of being extremely overbought and thus the current pullback is healthy; the same outlook applies to the monthly trend. As long as the weekly trend does not change, then all pullbacks (including the current one) have to be viewed as buying opportunities, even though we might personally feel otherwise. The trend on the daily chart is still up, but all secondary indicators are overbought and indicating that the current pullback is healthy. We have support in the 2000-2015 ranges and if that is taken out, the SPX will most likely revisit the lows of Dec 2014. The last update for Dec 2014, sent out Jan 3, 2015
One should expect Chinese markets to continue rallying higher, albeit the normal corrective moves (corrections mild and severe) along the way up. We expect when things calm down that Russian markets will also experience similar moves, perhaps even stronger because they are being pushed lower via artificial means. So if we take a look at the current chart, it appears that the markets followed the path we laid out for them as early as August of 2013. The Russian markets could end up doing the same thing. They have already off to a pretty good start. Last update for Dec 2014, sent out Jan 3, 2015
Note we stated that the Chinese markets were also extremely oversold not too long ago and continued to do this for awhile; we were a bit early, but as the saying to the early bird comes the worm to the late bird the bullet. The Chinese markets started to rally nicely since October of this year and topped out with our markets and should continue to resume their upward trend. One day we see FXI trading past 200 and RSX north of 70. Market Update Dec 21. 2014
As the weekly trend is still up, and the daily neutral, the markets will/should experience another quick correction and as long as the weekly trend does not change the markets will probably reverse and move higher again. We will not short the markets until the trend turns negative on the long-term time frames (weekly charts). The trend indicator overrules everything else; thus regardless of the pattern if the trend says something else, we will follow the trend. Market Update Sept 13, 2014
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The ultimate stock market timing system combines mass psychology and technical analysis in a seamless manner to yield dynamic tools that can adapt to the markets. This approach has enabled us to side steps all the major tops and to open positions at or very close to market bottoms over the past 17 years and counting. We don't try to predict the exact top as that is an exercise in futility and best reserved for fools with plenty of time on their hands and an inordinate desire of large doses of pain.