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 a countless number of times before. It never changes’ “flee for the world is going to end”. Hahaha, what utter rubbish.
There is one noteworthy 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, just remember
Stock Market Crash today; same old rubbish with a new name
In the last update the neutral readings came in at 42, prior to that it was 37, and the one before that came in at 41.00, and you can go back all the way 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 1st week of Jan, the Dow was trading in the 23,000 ranges after having dropped below 21,500 towards the end of Dec 2018. For the record, 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 what they might get is 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 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 it comes to investing. Market Update May 7, 2019
Market Crashes are nothing but perceptions
Stock Market crashes are all based on perceptions; depending on when you embraced this market, the pullback could range from a crash to a correction. For Astute investors, a crash is nothing but the market letting out a well-deserved dose of steam. So, stock market crash 2017 or 2018 will prove to be a buying opportunity as long as the trend is up. For others, it’s a monumental disaster 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 embraced this bull market in 2016, then a pullback in the 10%-15% ranges would feel like a crash. On the other hand, if you embraced this beast (Stock Market Bull) anywhere from 2009-2011, it would seem like a mild orderly correction.
We view Crashes through a bullish lens
As long as the underlying trend is positive. The trend indicator determines the trend; the trend indicator is unique as it determines the trend in advance. As the trend is up, is 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 stock market crash 2018 comes to pass and the trend is positive (and it’s very strong and showing no signs of weakening) then view strong pullbacks through a bullish lens.
Most experts almost gleefully try to force their twisted perceptions on everyone. Just because the experts decide to label it as a crash does not mean you should follow their lead; experts are known for getting it wrong all the time. In fact, experiments have shown that monkeys throwing darts at a random list of stocks fare much better than Wall Street experts. Hence, take their so-called sage advice with a barrel of salt.
If Experts knew so much they would be talking less and investing in the markets more.
Stock market crash 2019 might or might not come to pass, but what about all the market crash predictions that were made a countless number of 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, now they want to convince you that it is time to short it after failing to embrace it. How can one trust these penguins? If they failed to identify the bull market in the first place, how is it they are suddenly able to predict the top.
Stock Market Crashes are Based On Perceptions
Hence stock market crash 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 arrogant self-proclaimed know it all gurus.
Mass psychology is very clear when it comes to 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.
When you think about it, everything comes down to perception. Alter the angle of the observation slightly, and you modify the perception. What appears bullish to one could be viewed as an extremely bearish development by another.
When it comes to investing the goal should be to determine what view the masses hold whether it is valid or not is irrelevant for the difference between truth and deception comes down to perception also. If the masses are leaning strongly towards a particular outlook, history indicates that taking a contrary position usually pays off. Stock market crash 2018 is no different from all the other previous predictions the masses have made; one thing is certain the masses hardly ever get it right.
Monitor The Crowd
The masses have for the first time embraced this bull market. From a mass psychology perspective, this is 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 let out a stronger dose of steam than they have over the past 24 months. Tactical Investor
Mass Psychology States Market crash 2019 is not a certainty
Crowd psychology is very clear in this area; Bear Markets don’t start when the masses are anxious
Stock Market Crash 2019 is Not Written in Stone
The crowd appeared to embrace this market initially, 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 stock market crash 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 in the very near future.
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 and allow 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. When it comes to the markets, uncertainty is a bullish factor, for it means volatility is going to 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, 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
Given that this market has experienced such a massive run-up, it goes without saying that it needs to experience one relatively sharp correction; ideally, this correction would fall within the 15%-20% ranges. 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.
Stock Market Crash 2019: Every Bull Market Experiences A strong correction
Every strong bull market has to experience one adamant correction, and we do not think this market is going to be an exception. This pullback will be followed by an even more powerful rally, 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 large 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 it also 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 marvellously 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 have an impact on the financial markets. As we stated in the last update, an unusually large number of new subscribers was nervous. When we coupled this data with the sentiment data we tallied in the last update, it was a clear confirmation 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 pullback.
Regardless of whatever the media spouts out, these situations are engineered to look worse than they actually 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 MACD’s 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 indicates that whenever the masses panic, an opportunity is usually around the corner. 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
The guys predicting the demise of the world since the beginning of time will all be dead before even 1/10th of it comes to pass. This crash is a time to buy and the coronavirus is a test to see how fast social media can be used to stampede the masses. So far it’s working brilliantly, like fools the crowd’s stampedes without checking the facts
This could prove to be a fantastic buying opportunity for traders willing to take a risk. Don’t focus on the short term but in the long term, history indicates that the markets have an uncanny ability to trend upwards. Bears that have been beating the markets will crash have a dismal long term record. Markets trend upwards once the dust settles and this time will prove to be no different
Take a look at how many people die a day from other causes and the flu https://www.worldometers.info/
The masses are still uncertain so all sharp pullbacks have to viewed through a bullish lens. Do not listen to the noise but focus on the trend and build up a list of top-notch companies you would like to own. When the markets let out a large dose of steam you will be ready to purchase these companies at a significant discount.
Stock Market Crash 2020 Outlook March 12, 2020
Now given the intensity of the current sell-off, the markets are likely to mount a rally, the first attempt usually fails, and if history is to be trusted then when this rally fizzles out, it should lead to another downward wave, that could take the market to new lows on an intraday basis. If the pattern is strong enough, we could issue either a short term put play or open up strangle position. This is where one opens up both a call and put but with different strike prices.
Don’t forget to keep a trading journal; the best time to take notes is when blood is flowing freely on the streets.
Watch with amazement how the hysteria over the coronavirus disappears just as fast as it was created once the objective of lowering rates and approving multi-billion bailouts is achieved. The data on the coronavirus indicates that the high mortality rate is only applicable to older individuals and we are sure when that data is further examined, it will be discovered that these older individuals are not in the best of health. In other words, they probably have existing conditions.
The masses are far from bullish, In fact, they are downright panicking and therefore this blood-curling pullback has to be embraced with gusto. The stronger the deviation the better the opportunity. 6 months from the crowd will regret having through the baby out with the bathwater.
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
Other Articles of Interest
Stock Market Crash 2018 Revisited (July 12)
Uranium Bull Market 2018; The Crowd psychology Outlook Updated (July 2018)