Not being able always to identify the short-term trend is not a big deal as our focus has always been on the long-term trend.
What does this mean in terms of trading the markets? -Focus on the Long term trends
We brought this issue up not to discuss semantics but to prepare our subscribers for the upcoming changes/events
The markets will not correct when they are supposed to correct; they will run up much higher than expected. So, for example, GOOGL might appear to be extremely overbought in the 1560 ranges and begging to pullback. However, it could surge to 1760 or higher before pulling back very strongly and dropping all the way to the 1390 to 1420 ranges. The same will hold true for the Dow, Nasdaq, etc. What is expected to occur, will not, and the unexpected will come to pass over the short-term timelines.
Hence, the focus should be on the long-term timelines; in other words, the long term trend. Additionally, one also needs to be ready to move fast the moment the market’s pullback sharply. There is no room for fear, for the saying snooze you lose will come into play. Those that don’t move fast will miss out. A fast and furious correction will be followed by an even sharper upward move.
Be ready for markets such as Gold, BTC, the dollar and a host of other markets that never traded in unison to trend higher. It will confuse the hard money players and those that love fiat. The way to see what is really taking place would be to focus on the real move when inflation is factored into the equation. For example, despite the sharp rise in bullion prices, Gold has done nothing for 11 years. However, the potential for a new bull market could start, if Gold can end the month (any month) on a new all-time high. A new bull market starts when the market takes out its old highs in a decisive manner. If this occurs, Gold is likely to pull back to create the false impression that the market has topped out. Now if Gold closes at a new all-time high on a monthly basis, then it will create a path for silver to take out its old highs.
Now here is where the fun starts. Even though BTC has pulled back so strongly from its highs, it is still trading at a level that Gold will probably never achieve. Hence, keep the forest and tree concept in mind when you examine any market. BTC is still consolidating, and our overall view is that BTC is nothing but digital fiat, that the Central bankers while overtly discouraging are covertly encouraging. They will take over this market once it becomes mainstream. The central bankers want a cashless society and regardless of all the stories that are being pushed that BTC offers some form of protection or gives you some anonymity; this will all end when Quantum computers become mainstream. Something faster than quantum could be in the works.
In the old days, the masses would only win for a short period before the guillotine chopped their heads, but there is a good chance that in this market, the masses could appear to be correct for an extended period. Perhaps for a long as 12 to 15 months, which will only serve to confound the old experts even more. Then suddenly the masses will take it to the chin, and the contrarians will appear to be on the right side, and so on. What everyone will fail to notice is that most of the players will lose because they will overstay their welcome or overplay their hand. Only the trend player that has no emotional stake in the game will win continuously. Market Update July 22, 2020
Long term trends investing conclusion
We could go on and on providing you with more scenarios, but that would be overkill and a waste of time. The main point to walk away from all this is that one should not take anything for granted. COVID will be used to justify everything under the sun, and what used to work will not work. What should happen, will not always come to pass, and old school logic will fail for the most part when it comes to analysing this market.
Mass Psychology is going to play a critical role in determining how high this market goes and in determining future trends. Fundamental analysis is useless today and Technical analysis, if used in the old school way, is also practically useless. This is why we don’t use technical analysis in a conventional manner but choose to modify every tool we use, and every traditional tool is used unconventionally.
Regardless of all the rubbish, you hear about how overpriced this market is, how the world might end, or could end because of COVID or any other hysteria-based event; ignore those views as the ramblings of a mad person. According to the experts, the crash of 1929 was the end; then it was the crash of 1987 and so forth; what’s the common theme, most of those experts are either dead or dead broke if they followed their advice. Therefore, until the trend turns negative embrace every sharp pullback like a long-lost love.
Lastly, be prepared for 1500 to 3000 point weekly moves in the Dow going forward. When the Nasdaq hits 13,500, then be prepared for 290 to 500 point weekly moves in the Nasdaq on both ends of the curve (up and down) the sharper short-lived moves will most likely take place during corrective phases. While the masses panic, embrace them. Once again, until the trend turns negative if you are Tactical Investor, do not even dream of panicking or shorting the markets.
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