Stock Market Crash 2019: Reality or all Hype you be the judge

A man profits more by the sight of an idiot than by the orations of the learned.

Arabian Proverb

Stock Market Crash 2020; Will, The Experts Get It Right?

Updated July 2020

They got the stock market crash story wrong from 2008 all the way to 2020. So far, nothing has changed as we have one expert after another predicting that it is time for the markets to crash; mind you, these same chaps sang this same terrible song of Gloom countless times before. It never changes’ “flee for the world is going to end”. Hahaha, what utter rubbish.

There is one important factor, though; a few former Bulls have joined the pack. Does this now mean that the markets are going to crash? Before we answer that question, remember.

Stock Market Crash today; same old rubbish with a new name

In the last update, the neutral readings came in at 42, before that, it was 37, and the one before that came in at 41.00, and you can go back to Jan of this year to see that after bottoming out at 18 (Jan 1, 2019 update), the readings have steadily risen. However, in that same update (Jan 1, 2019), the bearish readings came in at 53; since then it appears that individuals from the bullish and bearish camps have been migrating over to the neutral camp.

The unexpected factor is that no one would have expected this to occur in a rising market. In the 1^st week of Jan, the Dow was trading in the 23,000 range after dropping below 21,500 towards the end of Dec 2018. Those holding out for a “crash-like scenario” might be sorely disappointed, as crashes occur when the masses least expect. The sharp pullback in Dec 2018 was something most did not expect as the markets had already pulled back from Oct to Nov 2018 and the follow-through caught many with their pants down. Now everyone is expecting a strong move, and they might get a minor pullback.

Those that hold out for a meaningful correction might be sorely disappointed as on the monthly charts, the Dow is trading in the extremely oversold ranges, and this could limit the downside action. Individuals that use the term significant or sharp when referring to a correction and who are not familiar with the concept of Mass Psychology usually have floating targets.

For example, before the correction starts, they might be satisfied if the Dow sheds 1500-2000 points, but after the masses are in full-blown panic mode, these guys will jump on the panic train and lower their targets. History illustrates that they will keep lowering the targets until the markets suddenly reverse course, catching them off guard once again. The crowd never wins, and that’s one of the main lessons investors need to understand when investing. Market Update May 7, 2019

Market Crashes are nothing but perceptions.

Stock Market crashes are all based on perceptions; depending on when you embrace this market, the pullback could range from a collision to a correction. For Astute investors, a crash is nothing but the market letting out a well-deserved dose of steam. So, the stock market crash in 2017 or 2018 will prove to be a buying opportunity as long as the trend is up. It’s a monumental disaster for others, and these investors dump the baby with the bathwater. In doing so, they provide astute investors with a once-in-a-lifetime opportunity.

If you have actively participated in the bullish market since 2016, a pullback in the range of 10% to 15% might feel significantly more drastic, resembling a crash. However, if you joined the market during the period from 2009 to 2011, a similar pullback would appear as a mild and well-structured correction. The perception of the severity of market fluctuations is relative and depends on one’s entry point and experience within the market.

We view Crashes through a bullish lens

As long as the underlying trend is positive. The trend indicator determines the trend; it is unique as it determines the trend in advance. As the trend is up, we can state with certainty that the naysayers are creating smoke out of nothing. Until the trend changes, we feel that all stock market corrections or crashes should be embraced and the greater the deviation, the better the opportunity.

Presently, the markets are letting out a well-deserved dose of steam, and there is no action better than Yo-Yo type action (up-down market action) to break the backs of both the bulls and the bears. When both camps don’t know what to expect, the path of least resistance is almost always upward.

Experts Wrong on Stock Market Crash 2019 As Evidenced by History

They will make similar claims in 2018 and 2019 as has been the case every single year since this bull began in 2009. If the stock market crash in 2018 comes to pass and the trend is positive (and it’s solid and showing no signs of weakening), then view strong pullbacks through a bullish lens.

Many experts often attempt to impose their biased viewpoints on others, sometimes even with a sense of delight. However, it is crucial not to blindly follow their lead simply because they label a market movement as a crash. History has shown that experts frequently make incorrect predictions. Surprisingly, experiments have demonstrated that monkeys randomly selecting stocks can outperform Wall Street experts. Therefore, it is wise to approach their so-called sage advice with a healthy dose of scepticism and not solely rely on their recommendations.

If Experts knew so much, they would be talking less and investing in the markets more.

The stock market crash in 2019 might or might not come to pass, but what about all the market crash predictions made countless times before? Had you listened to them, you would have been bankrupt already. If these experts were so astute, then why have most of them missed one of the biggest bull markets of all time? Moreover, they want to convince you that it is time to short the market after failing to embrace it. How can one trust these penguins? If they failed to identify the bull market in the first place, how can they suddenly predict the top?

Stock Market Crashes are Based On Perceptions

Hence stock market crash in 2017 or 2018 or 2019 is far from being set in stone. Several weeks ago we penned an article (excerpt provided below) where we stated that caution was warranted as the markets should let out some steam, but as the trend was still up, we did not feel it was time to short the markets. All the experts that stated it was time to bail out and short the market must be smarting from their losses.

The market loves to punish The Arrogant.

Mass psychology is obvious in the markets; the masses need to embrace the markets before one can claim a top is close at hand. The masses so far have refused to embrace this market for a prolonged period.

Perception indeed plays a significant role in shaping our understanding of various situations. Even a slight change in the angle of observation can alter how something is perceived. What may appear bullish to one person could be seen as an extremely bearish development by another, highlighting the subjective nature of perception.

In the realm of investing, it is essential to consider the prevailing views held by the masses, regardless of their validity. The distinction between truth and deception is also influenced by perception. If the majority of people strongly lean towards a particular outlook, history has shown that taking a contrary position often proves beneficial. This principle holds true for the stock market crash of 2018, just as it has for previous predictions made by the masses. It is worth noting that the masses rarely get it right when it comes to such predictions.

Monitor The Crowd

The masses have, for the first time, embraced this bull market. From a mass psychology perspective, this alone is not a huge negative. Mass Psychology dictates that the masses need to turn euphoric before one abandons the ship. It is not the time to abandon ship, but it is time to take a breather and let the storm clouds pass.

The Dow industrials exploded upwards and have experienced a near vertical move over the past two months. Under such conditions, one should not be shocked if the markets release a stronger dose of steam than they have over the past 24 months. Tactical Investor

Mass Psychology: A market Crash is not a certainty

Crowd psychology is obvious in this area; Bear Markets don’t start when the masses are anxious

Stock Market Crash 2019 is Not Written in Stone

The crowd initially appeared to embrace this market, but just as fast as they embraced it, they pulled back, as illustrated by one of our proprietary indicators. In Jan of this year, the gauge was in the middle of the Mild Zone, but as you can see as of the last reading, the gauge has just dipped into the “severe” zone. The current market sentiment is far from bullish and indicates that the stock market crash in 2019 is not a certainty; a correction is more likely than a crash. Given the current trajectory, we expect the needle to move deeper into the “severe” area very shortly.

See Opportunity instead Of Disaster If Market Crashes.

Instead of pulling back, the markets have continued to trend higher, and at this stage of the game, patience is called for. Ideally, the markets will let out a large dose of steam, but markets do not usually cater to your needs; barring a substantial pullback, a nice consolidation would suffice. Market consolidations drive key technical indicators into the oversold ranges, allowing the market to build up steam for the next upward leg.

This rapid change in Crowd sentiment validates what we have stated all along last year that the final part of this ride is going to be extremely volatile. It also confirms that all sharp pullbacks have to be viewed through a bullish lens, regardless of the intensity, until the trend changes. The trend is still up, and the masses are far from euphoric. Let’s not forget that Trump continues to inject a massive dose of uncertainty into the markets. Regarding the markets, uncertainty is a bullish factor, which means volatility will soar, and volatility is a trader’s best friend.

Focus on Today, for Tomorrow never comes.

Stock Market Crash 2019 could become a reality or remain a dream; the Stock Market could have crashed in 2016, 2015 and or 2014; could have, would have, and should have are pathetic arguments put forward by individuals who thrive on fear.

When it comes to the markets, fear is the most useless emotion one can possess, for it yields no positive result. One day the markets will crash but as of today, the bandwagon is not buckling under its weight, and the masses are not euphoric.

Experts Only Focus On The Fear Factor

In fact, the crowd is getting anxious because they do not know what to expect. Markets climb a wall of worry and plunge over a slope of Joy. Thus forget about Stock Market Crash in 2019 and focus on what the Crowd is doing. If the Crowd is Euphoric then caution is warranted and vice versa.

Given that this market has experienced such a massive run-up, it needs to experience one relatively sharp correction; ideally, this correction would fall within the 15%-20% range. Yeah, we know; now all the bears will rush out and scream, “we told you so”. Our response to these agents of misery would be, “Go crawl back under the rock you came from”. Just look how far the markets have rallied from their 2009 lows; to view a 15-20% pullback as the end of the world is an act of insanity.

Every Bull Market Experiences A strong Correction

Every strong bull market has to experience one adamant correction, and we do not think this market will be an exception.

An even more powerful rally will follow this pullback, and towards the tail end of this rally, the masses will embrace this market with gusto. Sentiment readings will soar, and everyone will be dancing up and down in Joy, and that is when the hammer will fall, bringing an end to this bull market and triggering the first phase of a stock market crash.

For now, caution is warranted, but shorting this market is not something the prudent investor should consider, at least not until the stock market experiences a trend change. Ideally, the market will shed a hefty dose of steam, and in doing so, they scare the living daylights out of the masses.

Stock Market Update Oct 2019

The average person’s brain is automatically attracted to negative events. Negativity sells and creates opportunities in the financial markets for the big players as they use this ploy to stampede the crowd. This trick has worked marvellously for generations and will continue to work for generations to come.

At the Tactical Investor, we examine psychological data from all fronts (data from our regular sources, friends, family, associates and subscribers). We gauge the stress responses to events/developments that can impact the financial markets. As we stated in the last update, many new subscribers were nervous. Coupling this data with the sentiment data we tallied in the previous update clearly confirmed that the crowd was sitting on the wrong side of the fence. If the market pulls back again, do not give in to fear and run from the very opportunity you were waiting/begging for before the markets started to pull back.

Regardless of whatever the media spouts out, these situations are engineered to look worse than they are; take any financial disaster, and if you move past the initial knee-jerk reaction where shorting the markets might have been paid off if one was nimble, the result is that the astute investor that used the sell-off to buy is the one that made out like a bandit.

Other Interesting Developments

Copper continues to put in a bullish pattern, and once the MACDs on the monthly charts experience a bullish crossover, we suspect it will not be too long after that before the markets explode.

According to the Tactical Investor alternative Dow Theory, if the Dow utilities trade to new highs, it is a good omen of things to come. The transport sector is expected to outperform the overall market.

Huge amounts of money have left the market, indicating that the crowd is panicking at precisely the wrong time. History suggests an opportunity is usually around the corner whenever the masses panic. Hence the only one that is going to take another round of beatings is the masses.

The Markets are mimicking the pattern they put in 2009; if this pattern completes, it will lead to an explosive upward move.

Market Views March 2020

Those individuals who have been predicting the world’s downfall since time immemorial will likely pass away long before even a fraction of their predictions come to fruition. Instead of succumbing to fear, the current market crash should be viewed as a potential opportunity for savvy traders who are willing to take calculated risks. It is important not to get caught up in short-term fluctuations; throughout history, markets have demonstrated a remarkable tendency to trend upward over the long term. Those who persistently bet against the markets often end up with disappointing long-term results. Once the chaos subsides, markets typically resume their upward trajectory, and this situation is unlikely to be an exception.

Take a look at how many people die a day from other causes and the flu https://www.worldometers.info/

Given the ongoing uncertainty among the general public, it is important to approach sharp market pullbacks with an optimistic perspective. Rather than being swayed by the noise and panic, it is crucial to focus on the overall trend and prepare a list of high-quality companies that you would like to invest in. When the markets experience a substantial decline, you will be well-prepared to seize the opportunity and acquire these companies at a significant discount. By maintaining a long-term view and strategic planning, you can take advantage of market fluctuations to build a strong investment portfolio.

Stock Market Crash 2020 Outlook March 12, 2020

Considering the current intensity of the market sell-off, it is likely that a rally will occur. However, it is important to note that the initial rally attempt often fails. Based on historical patterns, once this initial rally loses momentum, it could lead to another downward wave, potentially resulting in new lows on an intraday basis. In such a scenario, implementing a short-term put play or opening a strangle position with different strike prices could be considered.

It is recommended to maintain a trading journal, especially during times of market volatility when significant opportunities arise.

It is noteworthy that the public’s hysteria surrounding the coronavirus is likely to dissipate rapidly once the objective of reducing interest rates and approving multi-billion-dollar bailouts is achieved. Data on the coronavirus indicates that the high mortality rate primarily applies to older individuals, and it is probable that further analysis will reveal that these individuals already have existing health conditions. In other words, the higher risk is associated with those who are not in optimal health.

While the masses may currently be gripped by panic and lack a bullish outlook, it is essential to approach the significant market pullback with enthusiasm. The greater the deviation from the norm, the better the opportunity it presents. It is important to recognize that in about six months’ time, the crowd may regret their hasty actions of selling off assets without considering their long-term value. They might realize that they have discarded valuable opportunities amidst the chaos.

People deal too much with the negative, with what is wrong. Why not try and see positive things, to just touch those things and make them bloom?

Thich Nhat Hanh

Stock Market Crash 2020: reality or all Hype