Market Insights: October Stock Market Crash Update

October Stock Market Crash Update

Updated March 2020

October Stock Market Crash

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

 Overall we expect volatility levels to remain high, so expect swings in both directions ranging from mild to possibly wild and we would not be surprised if many parts of the world experience weather patterns bordering on the insane in the weeks to come. Wild weather is usually followed by insane human behaviour. Hopefully, we are wrong as when it comes to wild weather we are only too happy to be proven wrong as it brings untold pain and misery to many.

  On the political frontier, the situation is going to continue trending towards the insane and by 2020, any sane person is going to think that they need some strong medicine to follow what the candidates really have to offer. So far the scene has all the makings of a D rated movie

October Stock Market Crash Outlook

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 

Random thoughts

  One needs to understand that it takes time to get used to the principles of mass psychology as it disregards many of the so-called laws of financial wisdom, most of which, if one is truthful, would fall under the category of rubbish.

 The only real law that applies when it comes to the financial market is that there is no law. We are dealing with emotions and when emotions run amok, all hell breaks loose, that is why like cattle, the masses always stampede when the markets sell-off and all of them jump in when the bubble is about to pop. Hundreds of years have passed since the Tulip bubble and nothing has changed.

October Stock Market Crash Update, Oct 2019

The markets are volatile (Sept to Oct period) and the crowd tends to overreact to the news. Remember, every disaster becomes a disaster because the masses were conned into believing a false narrative. You say no way; well then how come reacting to disasters pays so poorly.  The stock market is the best barometer for the disaster-prone. If disasters paid off well, then the Dow should be closer to zero than 27K.

It takes zero effort to panic and the reward is exactly zero; those that panic in the face of adversity are given what they deserve. In terms of the market that means less than zero, as the masses always sell at the bottom and buy at the top. The astute individual that does not panic walks away with a huge reward and that is how it’s been for millennia and nothing is going to change for another 1000 years.

Stock Market Update March 2020

To put things into perspective, consider this: If cancer were a virus, it would be one of the most lethal viruses of all time, yet no one blinks that we lose 9.6 million people a year to this insidious disease. Until mass-scale testing is underway and the data is broken down into categories such as age group and other pre-existing conditions, all the massive death projections experts are issuing amount to faulty science.

It appears that the only course of action on the table is to give in to panic and flee for the heels. Well, that’s true if you are part of the herd; such action brings short term relief at the expense of monumentally large gains for the long-term player. Nobody knows the inner workings of a company better than the insiders and these chaps are doing something that can only be described as unprecedented, further confirming that this sell-off represents opportunity instead of a disaster. We will finish tabulating the latest batch of sentiment data tomorrow and another update will be sent within 48 hours if not sooner.

Backbreaking Correction or crash

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.  In today’s manipulated markets, one cannot tell which correction will morph into the backbreaking correction, as free-market forces have almost been eliminated from today’s markets.  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. Interim update March 9, 2020

The 1987 crash and 2008 crash fell into the category of the “mother of all buying opportunities“, but we could get a setup that could blow these setups and create the “father of all opportunities“. Such an event is so rare that it might occur only once during an individuals lifetime. In the short term, there is no denying the landscape looks like a massacre, but if one is going to focus solely on the short timelines, then the odds of banking huge profits are quite slim.

Just 15 days ago, everyone would have begged for such prices, but 15 days later everyone is ready to throw the towel in.  The volatility is likely to continue until the end of the month, especially since V readings soared by a whopping 650 points to an all-time high. Again, think about it, when was the last time the Fed dropped rates by 150 basis points in two weeks.  This is a massive development but its overshadowed by the current hysteria. As we stated before, companies are going to go ballistic with their share buyback programs.

When the panic subsides, it will create a feeding frenzy of the likes we have never seen before.  When you combine zero rates, two trillion dollar injection by the Feds and several more billion-dollar packages designed to stimulate the economy, the result is going to be a market melting upwards. The markets will be driven to heights that are unimaginable by today’s standards. Zero rates are also going to force a large portion of individuals on a fixed income to speculate, and these guys have a lot of cash sitting on the sidelines.