Dow Stock Market Outlook: Time To Dance or Collapse

Dow Stock Market Outlook:

Dow Stock Market outlook

Before we get into the outlook lets look at what we have said over the past few months:

In Jan 2019 we made the following comments

The markets are still trading in the overbought ranges and the markets have started letting out a well-deserved dose of steam. The action will probably remain volatile for some time and that’s a great development for traders.  Volatility fools the masses into thinking that the markets are set to crash and many of them will dump their top-quality stocks.  Our V-indicator which measures market volatility among other factors has soared to a new all-time high,  supporting our view that volatility is here to stay.

The best strategy under such conditions is to use sharp pullbacks to open positions in strong companies; the stronger the pullback, the better the opportunity.  We can already see signs that 2018 should be a good year for the markets. Individuals waiting for the ideal entry points will be left behind.  They will look back at today’s entry points and wish they had bought, just as they did back in  2014, 2015, 2016, & 2017 and wish they had jumped in. What separates today from yesterday? Nothing, the masses are held back by fear and uncertainty; as the saying goes “markets climb a wall of worry and plunge over a cliff of joy” Myths & Realities

In Feb of 2019, We stated the following

It takes a special kind of stupid to be a Permabear; the one that even a thousand hard slaps will not alter. Perma-Bears have a death wish; they are begging to be taken to the cleaners for nothing else can explain this short-sighted way of thinking. A simple examination of any long term chart will prove once and for all that being a Permabear is never going to pay off.  There is not one long term chart that can prove that taking a bearish stance, in the long run, has ever paid off.

PermaBear losing option according to Dow long term chart

Whatever trend line you use, the 1st or the second one, the above 100-year chart of the Dow clearly proves that  Permabears are in the wrong when it comes to investing.

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. Permabear; It takes A Special Kind Of Stupid To Be One.   Hence the Dow Stock Market Outlook going forward is that the astute investor should embrace all sharp pullbacks.

Dow Stock Market Outlook; Comments From June To Sept 2019

It takes no effort to panic and that is why there is no reward, but it takes effort to remain calm in the face of panic and that is why the rewards are usually very high.  Mass Psychology has a very clear stance on this position; stock market crashes are nothing but long term buying opportunities, for the masses always sell at the bottom and buy at the top. They are the perfect cannon fodder candidates; nothing has changed and nothing will change for the next millennia

The following excerpt was taken out of the July 31 st 2019 Market Update (our top premium service), so while there is always the chance the market could crash in September or October, this crash/correction has to be viewed as buying opportunity.

If the market pulls back, it’s a bonus, and this is why we also adopt the stance that when the trend is up; the stronger the deviation, the better the opportunity.  Strong pullbacks should be viewed as early Christmas bonuses as the trend is firmly up. Sharp pullbacks can be used to open or add to one’s current positions.  Market Update July 24, 2019

If yesterday’s pullback gains traction, then embrace, for it will prove to be a buying opportunity.  The best time to buy is when the trend is up, and one feels uncertainty creeping in and vice versa.  When one is sure that everything is fine and the markets are destined to trend higher, then it is more likely that the opposite will come to pass.

The Dow has now dipped below 27K (on a monthly basis), and in doing so there is a good chance that one of the two outcomes we favour may come to pass:

  • The Dow drops hard and fast to the 25,500 to 26,000 ranges, the crowd stampedes and in the process, the masses create a lovely long term opportunity for Tactical Investors
  • The market pullback a bit and then trends sideways and in doing so pushes our indicators into the oversold ranges.   Market Update July 31st, 2019  Market Insights: October Stock Market Crash Update

Dow Stock Market Outlook Oct 2019

Copper continues to put in a bullish pattern and once the MACD’s on the monthly charts experience a bullish crossover, we suspect it will not be too long after that before the markets explode.

According to the Tactical Investor alternative Dow Theory, if the Dow utilities trade to new highs, it is a good omen of things to come. In other words, the Dow industrials will follow the same path sooner or later. The Dow utilities surged to new highs in September and as a result, the Dow industrials and transports are expected to follow suit.  The transport sector is expected to outperform the overall market.  We are looking at both IYT and XTN as possible future candidates and we might even add TPOR to our list but it will be placed under the secondary candidates and will be labelled as a high-risk play (3X leveraged ETF)

Huge amounts of money have left the market indicating that the crowd is panicking at precisely the wrong time. History indicates that whenever the masses panic, opportunity is usually around the corner. Hence the only one that is going to take another round of beatings is the masses.

The Markets are mimicking the pattern they put in  2009; if this pattern completes it will lead to an explosive upward move.

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