Mindset The New Psychology Of Success
The current correction is the only one since 2011 that is real in nature, and it could prove to be a precursor to a larger upward move. If you recall, the dot.com era, the markets corrected strongly in 1998, it looked like the end was near but then the NASDAQ had its best year ever in 1999. It had tacked on gains of roughly 100%. The chart below highlights this dramatic reversal.
Mindset The New Psychology Of Success: Identify the Trend & the rest is easy
Throughout this bull-run, a plethora of reasons has been laid out to indicate why this bull should have ended years ago. Many of the reason laid out are valid, but being right does not equate to successful investing. The markets are not driven by logic; they are driven by emotion. What one needs to do is understand the emotional state of the masses and then one can plan a course of action. The masses are notorious for jumping in late and for jumping out too early. In both instances, their only gain is pain; in terms of the money, they lose on both sides of the equation. Be wary when the masses are joyous and joyous when the masses are worried. The trend is your friend and everything else is your foe.
The Fed is on “mission speculate” the end game here is to force as many people as possible to speculate in the markets. How will they achieve this? The mechanism being used is “negative interest rates”. We have moved into the next stage of the currency war games; the era of negative interest rates. Negative rates will eventually force the most conservative of players to take their money out of the banks and speculate. This process will be akin to another massive stimulus and will provide the bedrock for another monstrous rally.
Make a list of stocks that you would like to own and use strong pullbacks to add to or open new positions in blue-chip companies or companies with strong growth rates. Some examples are OA, AMZN, BABA, GOOG, RTN, CHL, etc
Additional options to consider
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Mass Psychology, Sentiment Analysis and Trading the Stock Market (Video)
Stock Market Update Oct 2019
APPL is also putting in a very interesting and bullish pattern and this also bodes well for this market, as this stock was a laggard. It could be the canary in the mine signalling that the markets might be overreacting to all the negative news.
The Dow utilities surged to new highs in September and according to the Tactical Investor alternative Dow Theory, it is an early indicator that the Dow industrials and Dow Transports will follow suit.
Everyone is jumping onto the bandwagon of negativity as seen by the huge amounts of money leaving the markets. Therefore the only plausible outcome is that the crowd (as always) is going to get hammered.
Lastly, the market is putting in a pattern that is dangerously akin to that of 2009, especially in the sentiment arena. We all know what happened after that.
Stock Market Outlook March 2020
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
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.