Market Outlook 2019
Trading is all about Volatility, but that’s not the problem, the problem is learning how to put this volatility to use in the correct way. Volatility readings have shot to a new high; 2018 has been a very active year as far as this indicator goes. This indicator has provided and continues to provide (advance) warning that traders should be prepared to deal with a more volatile market. Volatility is a terrible thing, only if one allows one’s emotions to do the talking; otherwise, it should be viewed through a positive lens as it keeps the masses uncertain.
On Monday (Dec 24), we had the worst Christmas Eve session in history. On Wednesday, another milestone was achieved; the Dow experienced its largest one day point gain ever. On Thursday, we set another record; the markets experienced the largest intraday reversal in over ten years. Such moves confirm uncertainty is at the helm and bull markets have never ended on a note of uncertainty.
Stock Market Outlook 2019: Uncertainty Is Bullish
And extreme Uncertainty should be viewed through a bullish lens. This market is not only experiencing an extended bout of volatility, but it is going through a bipolar phase as politics is being used as a weapon to move the markets. Without getting into details, politics (as politics, unless it’s related to the markets, is beyond the scope of this publication) is being used in a wicked manner to turn the masses on each other and to whip the markets. Whether you love or hate Trump, one thing stands out like a sore thumb; the media have never attacked a sitting president in such an aggressive manner. Trump has probably been attacked more than the last four presidents combined. Indirectly, this is having a significant impact on the markets.
Emotions drive markets
If you drive the masses insane with the rage, the driving force behind the markets change. Now you have a rage/frustration factor to add to the equation. The press has decided to turn regular politics into a weapon of mass destruction. Every single, stupid, meaningless event is turned into some political story. Today’s reporters are akin to prostitutes who will do the bidding of the highest bidder. Most of them would be perfect candidates for electric shock therapy, for only a severely disturbed person could hold a straight face while falsely pushing out stories under the guise of news when at best they would fall under the category of C**P.
We are not only talking about the events that are occurring in the US but all over the world. For example, look at the way the press and the elites are going out of their way to subvert the will of the people regarding Brexit by using every dirty trick in the book. They are falsely laying out stories that border on the surreal regarding the fallout Britain will suffer if it leaves the EU; these stories are rubbish, and in the long run, Britain would thrive by ridding itself of the shackles the EU has imposed on it. This tactic of mixing economics with politics to create uncertainty in the markets is being used quite ruthlessly. However, it is a deviation of the same old con; get the masses to dump quality shares at rock bottom prices.
When Emotions Talk, The Money Walks
Bear in mind we are examining the data from a trend perspective and not an emotional perspective. It is the press that is willfully weaponising the news and going out its way to sow the seeds of division, and in doing so, they have created so much angst and uncertainty, that these emotions finally found their way into the markets. One day the significant correction of 2018 will be used as an example to illustrate how an out of control press went out of its way to print rubbish instead of facts, in order to manipulate the perceptions of the masses.
We went on record to state that if Trump won the elections, that from an investment perspective it would be a fantastic development for the markets. Moreover, these statements were made before he was declared the winner. After he won the election, we went on record to state that the political landscape would resemble a soap opera on steroids.
If you want to rob a man without resistance, then all you need to do is make him focus on an issue that makes his blood boil. That is what is going now; the masses are being given two main options, both of which lead to unfavourable outcomes. We expect the attacks on Trump to surge to even higher levels, but from nowhere the resistance will suddenly coalesce and mount a counter-attack. However, this was the grand plan all along; conquer via division.
Now as the masses are inflamed and filled with rage, laws will be passed that will make it insanely easier for corporations especially banks to rob them. Never allow emotions to drive the decision-making process; the outcome is always bad in the long run.
Bears are out in full force, claiming that the world is coming to an end.
Now think about this; How many perma-bears are rich? The truth is that most perma-bears have been bankrupted several times over. Bull markets last longer than bear markets, and the returns are significantly higher.
Despite the rally, the gauge on anxiety index is still trading outside the extreme of extreme zones and bearish sentiment increased by another two points. Individuals from the neutral camp migrated towards the bullish and bearish camps. Bearish sentiment is very close to surging to a seven-year high. A move to the 57 ranges would achieve this feat.
Insiders are on a massive buying spree
Insider buying has surged to an eight-year high. These guys have insights into their companies, and if the markets were going to fall apart, they would not be investing their cash into a dying asset.
The number of corporate executives and officers scooping up shares of their own companies has doubled in the past two months from the prior two. As a result, insider buyers are outpacing sellers by the most since August 2011, data compiled by The Washington Service showed.
“Insiders are pretty well informed at the micro level of their businesses,” Todd Fungard, who oversee $1.2 billion as chief investment officer of McQueen, Ball & Associates Inc., said by phone. “It’s a good sign that business leaders still see demand at their companies and feel comfortable buying their own stock despite the headline risk.”
The last time insider buying spiked in this fashion, in August 2011, the S&P 500 was in the middle of a 19 percent retreat before staging a 10 percent rally in each of the next two quarters. Full Story
Market Outlook 2019: Lying Media & Ignorant Experts
The favoured downside target would fall in the 25,400-25,550 ranges. As V readings are extremely high, there is always the potential for an overshoot as shown in the above chart. Unless the trend reverses (and there is no sign of this) all pullbacks should be embraced; the stronger the deviation from the norm the better the opportunity. Market Update April 23, 2019
Ideally, the markets let out a nice dose of steam, but if they don’t that, that is fine too. We would be happy also if the markets hardly let out any steam, but negative sentiment spiked and our indicators pulled back from the overbought ranges. As we have stated on several occasions, pullbacks should be embraced and the stronger the deviation, the better the opportunity.
Emotions cannot be timed using mathematical models or theoretical constructs, as they are not based on logic. The focus should be on identifying topping and bottoming action and not trying to determine the exact top or bottom. Only fools attempt to do what history has proved over and over again as being impossible
This market correction should be a short term aberration unless we have a black swan type event and nobody can predict those, hence the title. However, even if that were to occur (black swan event), we would view it as a fantastic buying opportunity the markets were pushed to even lower levels. Why would we take this stance? The trend is still positive, and until it changes, corrections should be embraced. The only change in strategy is that we would use our technology tools and risk to reward models to fine-tune our entry points.
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Market Correction Vs A Back Breaking Market Correction (Jan 3, 2019)
Bitcoin Crash: Is Bitcoin Bull Dead Forever (Jan 1, 2019)
Market Outlook 2019: change the angle of observation and win the game