Stock Market 2018 Playbook; Follow The Trend

Stock Market 2018 Playbook: The trend is your friend

Financial experts continue to state that the markets are going to crash, even though their record since this bull market started back in 2009 has been dismal to say the least. To complicate matters, some of these same experts suddenly jump ship and begin to paint a bullish picture until the markets start to pull back. Then they falsely assume that the needs will crash and start singing the “market is going to crash” song again.

The overall sentiment in the market is not overly optimistic, although the positive sentiment has been gradually increasing since February of this year. According to the principles of Crowd psychology, it is advisable only to abandon an investment when the majority of people are extremely enthusiastic. Since that is not currently happening, there is no justification for abandoning the investment.

While the market has experienced some declines, they are considered to be within the typical range of a normal and acceptable correction, considering the significant increase in market value that occurred previously. Even if the Dow were to decline all the way to 21,500, it would not significantly impact the overall trend.

TI Dow Theory Validates Bullish Stock Market Outlook For 2018

Our alternative Dow Theory proposes that the movement of the Dow Jones Industrial Average (Dow) is influenced by the performance of utility stocks. As long as utility stocks do not reach new lows, the market will likely remain within a broad trading range. Despite various external factors, such as highly volatile geopolitical situations including trade wars and disputes with NATO allies, as well as the polarized behaviour of the masses, utility stocks have demonstrated remarkable resilience. Given the prevailing circumstances, it may appear that we are on the brink of a civil war.

Until the sentiment changes or the utilities drop to new lows, your best bet is to use strong pullbacks to purchase quality stocks.

Many individuals who claim to be financial experts are more akin to clowns than true experts, and numerous financial websites are comparable to tabloids. Their primary objective seems to be generating sensational headlines without substantial substance to support their inaccurate claims. It is advisable to approach their advice with skepticism and a healthy dose of skepticism, possibly accompanied by a metaphorical grain of salt and a touch of humor.

Instead, it is more fruitful to focus on mass psychology and discern the prevailing sentiment that influences the masses. It is the collective psychology of the crowd that drives the financial markets, and by understanding the emotions that guide them, one can gain insights into the market’s direction and trends.

The 2018 outlook for the stock market, as proposed by Tactical Investor, finds validation in the performance of the Dow Jones Transportation Average (Dow Transports). It is noteworthy that the Dow Transports are exhibiting resilience, and unless they consistently trade below 9500 on a monthly basis, the overall outlook remains optimistic. The prevailing trend in the market should be regarded as a guiding principle, while other factors may pose challenges.

In light of the positive trend, perceiving sharp market pullbacks from a bullish perspective is advisable. The greater the deviation from the trend, the more favourable the opportunity may be for investors.