Market Bear: How To Deal With The BS Bear Market Fable

Editor: Philip Ragner | Tactical Investor

Market Bear Is Growling?

If you look at history going all the way back to the Tulip bubble one theme rings out loudly; the experts always claim to know exactly when the market is going to crash. Interestingly these same jackasses had no idea as to when the market would take off, but suddenly they have become experts regarding when the stock market should and must crash.

Hidden in this rhetoric is a hidden theme that the masses in most cases fail to spot otherwise, these snake oil salesman would have been out of business long ago; these chaps were wrong so many times that had you listened to them you would have bankrupted yourself several times over. Note that even a broken clock is correct twice a day, depending on whether you follow standard or military time. Hence even if they eventually get it right, you would have been blown out of the water a long time ago. The scary Stock market crash that experts are overhyping

Market Bear: How To Deal With The BS Bear Market Fables

This article we penned some time ago, very adequately deals with the hysteria surrounding bear markets

So you ask why because it’s a prelude to a Massive Bull Run. Stock market crashes represent opportunity, it requires a change in the angle of observation.

It all depends on what side of the fence you sit on. If you decided to pour all your money into the market close to the top, then it would be viewed as a tragic event. If on the other hand, you got in early and as the market trended higher, you banked some of your profits then it would be viewed as a splendid opportunity. Crisis investing dictates that all disasters are nothing but opportunities, change the lens and the picture changes.

The main uptrend line is indicated by the solid blue line (last line in the chart above), but we put in a dotted navy blue line for those who would insist that the uptrend line could be drawn through secondary point. Whichever uptrend line you choose, you can see that this point holds true, the greater the deviation, the better the buying opportunity. Look at the chart above; who won the from 1990-2016, the bears or the bulls?. This chart is a clear illustration that the Doctors of Doom only make their money by selling the masses crap they would never dream of using. Why Market Crashes Should Not Be Feared

The difference between a strong correction and a backbreaking correction

A sharp correction is what we experienced in Feb of this year. The pullback is sharp and swift, and the fear levels rise significantly. A backbreaking correction is different. The term itself is indicative of the difference. The pullback is very strong but the volatility is insane, and the market appears to be bipolar. Chaos seems to be the order of the day, and even some of the most ardent of bulls start to question their stance.

Every bull market experiences one such correction. However, it is impossible to tell in advance which correction is going to fall under the back-breaking category. Trying to determine which correction falls in this category has a very high opportunity cost. It is tough to break out of the “anxiety stage” if you have been stuck in it for a long time. These traders eventually get their wish of very strong correction, but they are so scared that they are unable to act; they continue to assume that the market will keep going lower and lower.

Misery loves company, but it Tends to Pay’s very poorly in the long run

It looks grim, the media is pumping end of the world type scenarios, strong bulls are showing signs of weakness, and even contrarian investors are starting to break. Pure contrarians are smarter than the masses, but they do have flaws; the smartest investors are the ones that put the principles of mass psychology into play.

They observe the mass mindset, and they understand that even when fear starts to creep into the equation, they are compelled to ask this question: Was the crowd in a state of euphoria when the market topped out? If the answer is “no”, then no matter how terrible the picture might look, the end game is that the crowd is being set up for a false downward move. And the normal response would “why”. Simple answer, this is an advanced form of Pavlovian training.

When the market does put in a bottom after experiencing a backbreaking correction, and then goes on to mount a powerful rally; the crowd imprints the following data in their minds. Buy the pullback, because it is a fake trap to drive us out; they also start to believe in the following mantra “the stronger the pullback, the better the opportunity”.

Markets Provide Warning signals when all is not well

Next time when the Market puts in a top, bullish sentiment will remain unusually high, and that will be the warning to students of Mass Psychology that the real skull-crushing correction is on its way. Again, we point you in the direction of the not too distant Bitcoin spectacular bull market and the equally spectacular crash. From low to high Bitcoin tacked on 11,000% in gains and the masses still assumed that the only direction it could trade was up. When it topped the Bitcoin was beyond ecstatic.

Look at the above sentiment data; right now the number of individuals in the bearish and neutral camps adds up to a 68. No market has ever crashed on a note of uncertainty and the masses are far from certain or bullish; hence, the least path of resistance is up. Market Update Dec 2018

Bear Stock Market Update Oct 2019

As we have stated many times in the past, the hysteria over Stock market crashes and bear markets are permabear doomsters (yes this is a made-up word, but we are using to indicate how stupid these so-called experts really are)that have too much time on their hands and very little in terms of mental capacity. we are going to list a host of factors that paints a bullish picture for the markets going forward and put this bear stock market theory rubbish to rest.

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, an 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.