Stock market Crash 2020 Predictions are All Based On Faulty Logic

Stock market Crash 2020 Predictions are All Based On Faulty Logic

Updated March 2020

Stock Market Crash 2020 Predictions

Stock Market Crash Stories Make for Excellent Fables. Many of these experts should consider a career change and start penning works of fiction.

The story the media and all the experts were pumping during the sell-off phase (Nov-Dec 2018) was that the crowd had to worry about higher rates and an increasingly hawkish Fed.  And voila, like magic, the narrative has changed; now they are talking about a Powell put and how the Fed is turning dovish, which proves two points we have been stating for a long time

  1. Mass Media should be viewed and treated with the same respect as sewage.
  2. The masses (which include the experts) are always on the wrong side of the fence. For the record, these same penguins were stating that the markets were destined to crash last year.

Stock Market Crash 2020 Predictions Are Based on Faulty Logic

We encourage our subscribers to adopt a mindset that avoids succumbing to fear. Fear-based decision-making can be detrimental in both life and investing. Stress, often associated with anxiety, is a subjective perception that can be altered by changing one’s perspective. By shifting our perception, we can transition from a state of stress to serenity.

It is essential to recognize that investing is an art rather than a science. Enjoyment should be derived from investing rather than viewing it as daunting. While experts may argue that investing is difficult and takes a long time to master, it is crucial to maintain a positive and enjoyable approach to the art of investing.

As for the masses, some individuals are likely jumping on the bandwagon after witnessing a strong turnaround in the market. However, the less obvious answer requires further exploration. Readers will uncover additional insights and perspectives by continuing to read and gather information.

Investors are sitting on a massive pile of cash, growing by the day.

The masses panicked when the so-called Santa Claus rally failed to materialise. They failed to spot that Santa was providing the astute player with a lovely shopping list, and all the goods were on sale.   This January effect was one of the strongest on record and more than makes up for the Santa Claus failure, proving that our stance to remain calm during the so-called December meltdown (opportunity as far we are concerned) was the correct posture to take. Santa Claus did not give presents last year, but he gave us a great list of stocks to buy at a discount.

To date, institutions and individuals have poured billions upon billions of dollars into money market funds. The apparent culprits were; Interest rates, the trade war, the government shutdown, Trump investigations and whatever other rubbish you can come up with. Money market assets surged to $3 trillion this January, the highest level since March 2010, clearly indicating that the masses as always, know nothing and jump into the wrong investment at precisely the right time.

Pay close attention to the masses, for the data they willingly provide is worth its weight in Gold. Sadly, the masses volunteer to be used as “cannon fodder” repeatedly. Try to save them, and they are likely to crucify you to the nearest pole they can find. Watch or read Plato’s allegory of the cave to understand why the masses will never reward anyone that tries to open their eyes.

Common Themes During Stock Market Crashes

The world is ending, and everyone needs to flee for the hills. The wretched media then diligently create a cocktail on steroids and serve it to the herd; without fail, they fall for the same ploy over and over again.

“Investors can penalize themselves. While money market funds offer safety, they come at a cost as they accept a lower yield,” said Jerome Schneider, head of short-term portfolio management at PIMCO in Newport Beach, California.

“I like cash now. You can earn a very reasonable return on cash,” said James Sarni, senior portfolio manager at Payden & Rygel in Los Angeles.

We stated that the Fed lied about inflation, and now the truth has emerged. Suddenly Powell is changing his tune. Now he has pledged to be “patient” before raising rates; what gives? B.S that is what gives the Fed’s only function is to foster boom and bust cycles.

“I worry those investors who have long-term horizons may be hurting themselves,” said Kristina Hooper, global market strategist at Invesco in New York.

As always, the masses will wait until the very end. Then they will jump in and shortly after that the markets will tank. For the masses, the only possible outcome is pain and loss.  Investors sitting on the sidelines are already paying the price, quality stocks have made a strong comeback from their Dec lows, and the party has just begun.

PIMCO’s Schneider stated the following, and we could not agree more

“They tend to play it safe for too long,”

Our Response To These Stock Market Crash 2020 Predictions

This line of thinking is on par with rubbish; the markets have already priced this factor in, and the experts will now spin gossip into the news. They are still pushing the Tariff wars issue, but it will end on the same note; lots of huffing and puffing, but the bad wolf will not be able to blow the house down.  What will knock this bull out? When the masses are ecstatic, until then, all the nonsense that is graciously labelled as “news” should be taken with a barrel of salt and a shot of whiskey.

 Despite the sharp rally the markets have experienced, the masses surprisingly are far from bullish; the most significant number of individuals is in the neutral camp. In the current reading, the number of individuals in the neutral base stands at 37, and bears account for 32; this means that 69% of individuals are still either uncertain or bearish, which has to be viewed as fantastic development. 

Stock Market Predictions Outlook

A potential triple-top pattern is emerging on the weekly charts of the Dow Jones Industrial Average (Dow). Contrary to common belief, triple tops are not necessarily indicative of a dangerous market condition; instead, they often signal that the market is preparing for a stronger move. During this process, the market may experience temporary pullbacks when the triple top zone is tested, which can create the illusion of an impending crash.

Ideally, we hope that the news media plays its role by broadcasting gloomy and pessimistic news. This kind of coverage tends to accelerate market corrections. Additionally, a surge in negative sentiment often indicates that a market bottom is approaching. On the weekly charts, the Dow is currently trading in overbought ranges, making a pullback from these levels justifiable from a technical standpoint. However, it is worth considering that the monthly charts indicate oversold conditions, which may act as a limiting factor.

Those who anticipate a significant market correction might be disappointed because the monthly charts show that the Dow is currently trading in an extremely oversold range. This oversold condition has the potential to restrict further downside movement. It is important to be cautious of individuals who are unfamiliar with the concept of Mass Psychology and use terms like “significant” or “sharp” when referring to a market correction, as their target levels tend to change frequently. Before the correction, they may be satisfied with a decline of 1500-2000 points in the Dow. However, once panic ensues among the masses, these individuals often revise their targets lower. Historical patterns indicate that they continue to lower their targets until the market unexpectedly reverses course, catching them off guard once again. Investors should recognize that the crowd rarely succeeds in such situations, and this serves as a valuable lesson in the realm of investing.

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

Ideal SetUp Calls For Markets To Let Out Some Steam

It would still be acceptable even if the markets don’t experience a significant pullback. We would also be satisfied if negative sentiment increased and our indicators showed a retreat from overbought levels. Our approach focuses on analyzing sentiment to determine the driving emotions behind the market, and then we utilize technical analysis to refine our entry points.

We have emphasized that pullbacks should be embraced, and the greater the deviation, the better the opportunity. We believe in the effectiveness of market timing, but it is essential to clarify that what most people consider market timing is, in our view, an exercise in futility. Attempting to pinpoint the exact top or bottom of the market is an unrealistic expectation. Emotions cannot be precisely timed using mathematical models or theoretical constructs, as they are not purely logical in nature.

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. Extracted from the May 7, 2019, Market Update 

Stock Market Crash 2020 Predictions Update March 2020

To provide some perspective, let’s consider the following: If a virus caused cancer, it would be regarded as one of the deadliest viruses in history. However, we seem to accept that 9.6 million people die each year from this devastating disease. Until comprehensive testing is conducted on a large scale and the data is thoroughly analyzed, including factors such as age groups and pre-existing conditions, the dire death projections put forth by experts can be seen as flawed science.

It may seem that the only option available is to succumb to panic and join the herd in fleeing. However, this is true only for those who follow the crowd. Such actions may provide short-term relief but can result in significant missed opportunities for long-term gains. Insiders within companies deeply understand their operations, and their unprecedented actions during this sell-off indicate that it should be viewed as an opportunity rather than a disaster. We are currently in the process of analyzing the latest sentiment data, and an update will be provided within 48 hours, if not sooner.

Don’t Confuse A Correction With A Crash

It seems the markets are currently undergoing a “backbreaking correction,” which occurs at least once in every bull market and is often mistakenly perceived as the end of the bull run. In today’s manipulated markets, it is difficult to determine which correction will turn into a backbreaking one, as free-market forces have been significantly reduced. Although it may seem catastrophic, such corrections typically conclude with a substantial reversal.

Considering the current exaggerated response to the coronavirus, there is now a 70% probability that once the Dow reaches its bottom and changes direction, it could experience a surge of 2200 to 3600 points within a span of ten days.  Interim update March 9, 2020

The crashes of 1987 and 2008 presented incredible buying opportunities, often referred to as the “mother of all buying opportunities.” However, we could potentially witness a setup that surpasses those events and creates the “father of all opportunities.” Such a rare event may only occur once in a lifetime for an individual. Looking beyond the short-term perspective is essential, as focusing solely on short timelines significantly reduces the odds of achieving substantial profits.

Just 15 days ago, many would have eagerly sought these prices, but now, 15 days later, the sentiment has shifted dramatically. The volatility will likely persist until the end of the month, particularly considering the surge in V readings, reaching an all-time high of 650 points. It’s worth contemplating the significance of the Fed lowering rates by 150 basis points in just two weeks. This is a monumental development, although the prevailing hysteria currently overshadows it. Companies can take full advantage of this situation through share buyback programs.

Once the panic subsides will trigger a frenzy of buying like never before. The combination of near-zero interest rates, massive injections of trillions of dollars by the Federal Reserve, and additional stimulus packages to revitalize the economy will propel the markets to unprecedented heights. The markets will soar to levels that surpass today’s imagination. Furthermore, the zero rates will push many individuals with fixed incomes into the realm of speculation, as they have substantial cash reserves on the sidelines.

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US Debt To GDP Means Nothing To Bonds & Stocks  (Feb 12)

Technology-Driven Deflation Will Kill The Inflation Monster (Feb 7)

Business Investment & Stock Market Uncertainty   (Jan 31)

Dow 30 Stocks; what are they saying about the markets  (Jan 30)

Stock Market Bull 2019; Follow The Trend & Avoid The Noise   (Jan 29)