The Trend is up?

[Triplethought]

At the top of each Market update there is always a graphic with a green arrow pointing up that says "Trend indicator Reading Bullish" or "Market Trend" with up green arrow. I haven't opened every one of this year's market updates to verify but by memory and with a spot check on a few it seems the graphic always shows trend is always up.

But the trend is quite clearly down this year. A 23% decline in S&P and a 31% decline in the Nasdaq (which contains many of our plays). If one brings up a chart of the S&P500 (or any other index) for the year 2022 it's pretty clear the graph is down all year long.

Sol and many others have said "don't fight the Fed" and it occurs to me by assuming the trend would be up during this period when the Fed has been raising interest rates and saying the trend is up and continuing to do buys we have been fighting the Fed. That is reflected in our portfolios being down this year (and yes...so are everyone elses). Sol has said the Fed will eventually be forced to give up and reverse course. Due to "velocity of money". I don't understand that argument (above my knowledge level) but whether we call that capitulation or merely the expected cycle of events once inflation is under control it doesn't change the fact that while the Fed is raising rates the market is unlikely to rally (at least long term).

In the recent market update there is lots of the typical gobbedly gook about the markets but among the quotes are "The opposite of what we predicted last year is coming into play for 2023 (long-term analysis); the pattern calls for a multi-month bottom in 2023 and a powerful rally. "

I personally agree with that statement (although I think the trough of this downward trend could be as early as November 15th 2022 or as late as sometime 2024 and will be triggered by a news event). Although if Russia uses a nuke all predictions are mute. But, baring that and if that's true it means the market indices will continue to drift down thru the end of this year (obviously with high volatility and the occasional upward spike but generally down). This is why I sold a lot of my stocks on August 16th and am currently sitting out on most buys. The recent advice to sell at a loss and buy long term calls (LEAPS) or Sell Puts as a defensive strategy to me carries the significant risk that the bottom may not occur in 2023. I have to think more about this "doubling down" strategy that is based on the premise that long term stocks will eventually rally. While true they don't HAVE to rally within the next year. I think it has to be used carefully (i.e. don't bet the whole portfolio).

My question to SOL and the team is "what gives with the green up arrow?" If your answer is that over long periods of time the markets reliably trend upwards I would say "no shit sherlock". But if THAT is what that green arrow means then I would propose that the graphic at the top of the market update is generally not useful. I think the arrow should be a best guestimate on what markets will do for the next month (until the next newsletter) to be useful. Thanks in advance.

[SOL]

That is the ultra-long-term trend. Not to be confused with short, intermediate and regular long-term trends. If that ultra-long-term trend turns negative, then all hell is going to break loose. It's also the main reason we view all crashes and disasters as opportunities.

However, if we put long-term and ultra-long-term outlooks it could confuse individuals.

"The opposite of what we predicted last year is coming into play for 2023 (long-term analysis); the pattern calls for a multi-month bottom in 2023 and a powerful rally. "

The point here is that while 2022 was expected to be the year when the markets experience a correction. 2023 is when we expect the markets to put in a significant bottom and then mount a multi-month and very likely a multi-year rally.

[Triplethought]

That is the ultra-long-term trend. Not to be confused with short, intermediate and regular long-term trends. If that ultra-long-term trend turns negative, then all hell is going to break loose. It's also the main reason we view all crashes and disasters as opportunities.

However, if we put long-term and ultra-long-term outlooks it could confuse individuals.

"The opposite of what we predicted last year is coming into play for 2023 (long-term analysis); the pattern calls for a multi-month bottom in 2023 and a powerful rally. "

The point here is that while 2022 was expected to be the year when the markets experience a correction. 2023 is when we expect the markets to put in a significant bottom and then mount a multi-month and very likely a multi-year rally.

LOL OK. I will aggressively ignore the arrow. although I'm curious if "ultra-long term" "short" "intermediate" and "long-term" can be stated in months or year ranges.

[Yodean]

LOL OK. I will aggressively ignore the arrow. although I'm curious if "ultra-long term" "short" "intermediate" and "long-term" can be stated in months or year ranges.

btfd ...

[Eric]

[jlhooter]

Eric your picture speaks volumes. It's a nice green fat bright arrow too.

[outof thebox]

Excellent visual Eric

I have kept a journal for a long time. Well actually it started with as a scrap book, with newspaper clipping and i would write a note here and then and put a happy, sour or worried face to denote my state of mind. Later on it grew into a real journal of sorts over the years. What is fascinating is that when I was fearful or anxious and pushed the buy button, my results 12-24 months later were well exceptional. When I was quite sure of the trade, the results were not that great. You can only see patterns like this if you keep notes. If I rely on my memory, my mind conjures a better visual, it almost appears that I was not that nervous. Only when I read my notes can I see the worry and tension. So the saying buy when there is blood on the street appears to be solid.

[George1010]

Excellent visual Eric

I have kept a journal for a long time. Well actually it started with as a scrap book, with newspaper clipping and i would write a note here and then and put a happy, sour or worried face to denote my state of mind. Later on it grew into a real journal of sorts over the years. What is fascinating is that when I was fearful or anxious and pushed the buy button, my results 12-24 months later were well exceptional. When I was quite sure of the trade, the results were not that great. You can only see patterns like this if you keep notes. If I rely on my memory, my mind conjures a better visual, it almost appears that I was not that nervous. Only when I read my notes can I see the worry and tension. So the saying buy when there is blood on the street appears to be solid.

The first statement that came to mind was Man that's a lot easier said than done.

The second thought that came to mind is that if one can do it, the rewards are outstanding, but dealing with panic/fear/anxiety/doubt are really hard obstacles to overcome. Therefore, it stands to reason the big money counts on us succumbing to these forces and voluntarily handing over shares in top rated companies for free.

I can state without any hesitation that no matter how many times I have told myself that i should embrace Fear. Fear does initially get the upper hand and I have to take a walk and calm the mind so that I can see the bigger picture. It's definitely not easy to remain calm, let alone thinking about buying when you are looking at a of sea red.

However, the more often you look at fear as some sort of fake agent trying to fool you into taking the wrong action, the easier it becomes to resist, but it's never easy. And that is why I think the rewards are outstanding over the long term for those that are able to muster the strength to remain calm in when the Hurricane of Fear descends. For the big players, big boys, PTB or whatever they are called, it's easy, they don't have to go through the crap we have to, for they know the outcome. In some aspects it really sucks not be one of the chosen ones, but that's life.

One trick I use to overcome any blocks that might appear is to visualize someone asking me to give them 1000 dollars in exchange for 100. That would be insane under any normal conditions, but it appears we are indirectly doing that when we sell good companies for next to nothing. If these companies were worthless than why are the big players buying them from the peasants

[Centeron631]

To be frank im having problems following all the recent ideas in the many blog topics :

Is Sol now saying that the interim notewothy rally that was suppose to occur in Q4 is off the table and same for the 2023 Q1 and Q2 alternatives?

Is Sol saying that there will never be an interim noteworthy rally except small 2-3 day blips up until the big fall off sometime later in 2023 (and TT saying even possibly into 2024) at which time the bottom will be put in? So also if we cannot predict much how will we know for sure when the bottom is put in and if a early jump up is the start of new bull or just a headfake?

Sol is now reversing and saying yes this time is now different than previously in history and if so how?

Ti and others keep talking about all the good companies that we own. Surely there are some bad companies that we own and i for one would like to know which ones ie no hope or just a tittle of hope of ever turning around as i might as well sell those off now as the bottom of the relevant markets apparently is still months if not years away and take the Tax Losses and put the cash into some companies that have a chance of huge gains.

I am still wondering what metrics/due diligence other than ta were used in selecting these good companies ergo good businesses in the first place ?

I am also wondering what sectors % wise we r into taking both the ai and mu stocks together? thks please have patience!

[Cinnamon]

To be frank im having problems following all the recent ideas in the many blog topics :

Is Sol now saying that the interim notewothy rally that was suppose to occur in Q4 is off the table and same for the 2023 Q1 and Q2 alternatives?

Is Sol saying that there will never be an interim noteworthy rally except small 2-3 day blips up until the big fall off sometime later in 2023 (and TT saying even possibly into 2024) at which time the bottom will be put in? So also if we cannot predict much how will we know for sure when the bottom is put in and if a early jump up is the start of new bull or just a headfake?

Sol is now reversing and saying yes this time is now different than previously in history and if so how?

Ti and others keep talking about all the good companies that we own. Surely there are some bad companies that we own and i for one would like to know which ones ie no hope or just a tittle of hope of ever turning around as i might as well sell those off now as the bottom of the relevant markets apparently is still months if not years away and take the Tax Losses and put the cash into some companies that have a chance of huge gains.

I am still wondering what metrics/due diligence other than ta were used in selecting these good companies ergo good businesses in the first place ?

I am also wondering what sectors % wise we r into taking both the ai and mu stocks together? thks please have patience!

I don't think he is reversing course (at least from my perspective). From what I can see he was just explaining the Trend indicator to TTH and the long term outlook. First one was issued roughly I think end of 3rd quarter of 2021 (not 100% sure as I would have to look) where he started to talk about two corrections in 2022. And as for the 2023 bottom he mentioned that before but that is the long term outlook for 2022.

As for the short term outlook TI team is still expecting some sort of rally, but with reduced targets, based on the last MU.

I think the focus should be on MU updates. The forum is a place where ideas are exchanged

[Yodean]

I am also wondering what sectors % ...

This isn't really a specific answer to your question, but the precious metals sector looks interesting again. I've been slowly accumulating silver and gold assets on dips recently. And of course, I've always had a big helping of uranium.

AI-Tech is the present and the future, but a little diversification doesn't hurt, especially if they're assets in sectors with which one has some experience.

[jonnyfrank]

So....is a quick rally up for some to unload on the immediate horizon? Yes, we all get that the bull will be back with a vengeance. However, some may be trying to unload so as to free up more cash to buy at "delicious" prices later. So....is there an anticipation of a rally up soon before the bears devour many to 20,000?

[deepthinker]

So....is a quick rally up for some to unload on the immediate horizon? Yes, we all get that the bull will be back with a vengeance. However, some may be trying to unload so as to free up more cash to buy at "delicious" prices later. So....is there an anticipation of a rally up soon before the bears devour many to 20,000?

I think one should always keep some cash on hand for those special opportunities. Having said that I think most of us (and that includes me) placed too much emphasis on the short term outlook as opposed to the long term outlook by TI.

The rally is contingent on certain factors and no one can predict the future, all they can do is come up with the best probable outcome.

I looked at the past crashes especially the 2008-2009 one. I sold a sizeable portion of my holdings and SOL is right, most of the stocks traded 3 to 10X above their old highs. Had I done absolutely nothing and held most of those stocks, I would have close to 1 million extra prior to this correction.

I am also hoping for a rally, but if it does not materialize, I am going to put some of the options SOL discussed in the last few updates. Selling some of my positions and purchasing LEAPS to free up cash, but I will only do this when SOL indicates a bottom is in. I have already started to put option two into play but on small scale. I have sold some of positions that are slightly profitable or showing small losses and then I sold out of the money puts for mucho premium.

There are others that doing this. Yodean is a good example, I think he said he mode over 120K in a few months by just selling puts and covered calls.

[jonnyfrank]

I continue to short and recently put some money into TMV. Until I get a clue that the FED will back off, I see no other way. SQQQ has gone from 31 to 61 in past few months so IMHO the idea of never consider shorting is complete hogwash. If the DOW falls to 20k, why not ride the true trend rather than fight it? As the saying goes, the trend is your friend. I keep raising my stop on SQQQ and right now it is 52, so my risk is minimal via shorting in this market. I think everyone needs to realize that the TI is bullish, and it needs to be digested with that bias in mind. The danger is not recognizing that. I am not a fan of the words "always", "never" and "forever", as they are words often used in fairy tales. When I read SOL's position on never shorting markets, I took a step back and have since proceeded with caution when digesting the TI. I think everyone should do the same, and continue to question his positions. We are truly in un-chartered waters with the US administration and the obtuse acts of "leadership". The markets don't like uncertainty, and we are awash in it.

My 2 cents. I think TI is very valuable and I find it to be very insightful, so this is not meant to be a knock on it.

I hope the FED does an about face soon. In the meantime, we need to face the fact that data releases matter, and the upcoming CPI will move the markets.

[Yodean]

So....is a quick rally up for some to unload on the immediate horizon? Yes, we all get that the bull will be back with a vengeance. However, some may be trying to unload so as to free up more cash to buy at "delicious" prices later. So....is there an anticipation of a rally up soon before the bears devour many to 20,000?

My base case is for October to end up higher than it started, for the equity indices ... many stocks are starting to diverge from the indices. Overall consolidation, range-bound markets with bullish bias.

Another big "leg down" may not occur until late '23, who knows?

If I had to sum up in two words what my investing tactic is at the moment, they would be: "judicious accumulation." I try to focus on the best stocks and sectors.

On a day when bombs are falling on Kyiv (apparently), one would have expected gold to do a bit better, equities to crash more, and oil to go up more.