Stock Market Crash Date: If Only The Experts Knew When

Stock Market Crash Date: If Only The Experts Knew When

Updated March 2020

Stock Market Crash Date: everyone Barks But No One Bites

Experts are notorious for issuing dates and dire predictions but on both counts, if one bothers to track their performance, one will find that monkey’s with darts fare much better.

This is what we stated to our subscribers on the 11th of July 2019.

Looking at the chart below, it would be easy to conclude that we are about to push the “triple top” theory, but we are not.  We are looking at the picture in terms of very strong resistance and very strong support zones.  The Dow has tried to trade above 26,800-27,000 ranges almost 19 months. Furthermore, these attacks have been widely spaced out.  Hence, the Dow is now at an inflexion point”; it either blasts above 27,000 and in doing so former resistance turns into strong support.

Forget the Stock Market Crash Date Argument; Focus on the Trend Instead

Alternatively, if it fails to hold above 27K (after trading above it) the pullback could range from medium to strong. A medium pullback would end in the 25,500-25,800 ranges. A strong pullback could take the Dow all the way down to 24,5K (plus or minus 200 points).

This outlook is based on the short to intermediate timelines; the long term picture is still bullish. We are not worried about a sharp or medium pullback for the only thing that changes is the opportunity factor. When the trend is up, strong deviations are viewed through a very bullish lens; in other words, the strong the deviation, the better the opportunity factor.   If the above comes to pass, it will be a good time to test your resolve for it is easy to buy when the situation appears to be calm, but when it’s not most panic and run instead of embracing the opportunity. It’s amazing how when a market is soaring everyone wants to get in and pay more and more, but the same individuals that were willing to pay more are now afraid to pay less for the same stock.   End of Market Update, July 11, 2019 

Market Sentiment is far from bullish

Take a look at the gauges below and it immediately becomes obvious that the only ones that are scared are the ones that historically fare the worst. Anyone with the mass mindset falls under that category. In other words, lemmings will always be lemmings and their only function when it comes to the markets is to be used as cannon fodder.

 

 

The long term outlook for the Dow and the overall markets remain unchanged.  On the monthly charts, the Dow is still trading in the oversold ranges, so despite the gnashing of teeth, this current pullback has to be viewed through a bullish lens. The only area of focus, therefore, should be directed at finding the best stocks to get into as stocks are not created equal. For example, value investing is almost dead as hot money is chasing momentum-based stocks and if you get into a momentum based stock at the wrong time, despite strong fundamentals you could end up being on the receiving end of the stick.

Stock market Update March 2020

The reason the markets have overreacted to the Coronavirus is because of one simple factor; weaponised news.  The crowd is being driven by fear as opposed to logic, hence the strong market reaction, but that reaction will be even stronger to the upside when this fear finally subsides.

Every bull market experiences at least one backbreaking correction that is falsely mistaken for a market crash.  The current correction could morph into a backbreaking correction. To be classified as a backbreaking correction, the market has to shed a minimum of 20% from its highs.  The good news is that every backbreaking correction leads to an even stronger upward move.

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.

Stock Market Update March 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.

Backbreaking Correction or crash

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

The 1987 crash and 2008 crash fell into the category of the “mother of all buying opportunities“, but we could get a setup that could blow these setups and create the “father of all opportunities“. Such an event is so rare that it might occur only once during an individuals lifetime. In the short term, there is no denying the landscape looks like a massacre, but if one is going to focus solely on the short timelines, then the odds of banking huge profits are quite slim.

Just 15 days ago, everyone would have begged for such prices, but 15 days later everyone is ready to throw the towel in.  The volatility is likely to continue until the end of the month, especially since V readings soared by a whopping 650 points to an all-time high. Again, think about it, when was the last time the Fed dropped rates by 150 basis points in two weeks.  This is a massive development but its overshadowed by the current hysteria. As we stated before, companies are going to go ballistic with their share buyback programs.

When the panic subsides, it will create a feeding frenzy of the likes we have never seen before.  When you combine zero rates, two trillion dollar injection by the Feds and several more billion-dollar packages designed to stimulate the economy, the result is going to be a market melting upwards. The markets will be driven to heights that are unimaginable by today’s standards. Zero rates are also going to force a large portion of individuals on a fixed income to speculate, and these guys have a lot of cash sitting on the sidelines.

Other Articles of Interest

Nickel Has Put In A long Term Bottom; What’s Next?  (July 31)

AMD vs Intel: Who Will Dominate the Landscape going forward (June 28)

Fiat Currency: Instruments of Mass Destruction     (June 18)

The Retirement Lie The Masses Have Been Conned Into Accepting (June 15)

Stock Market Bull 2019 & Forever QE  (June 13)

Forever QE; the Program that never stops giving    (May 31)