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 fictions.
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 viola like magic the narrative has changed, now they are talking about a Powell put and how the Fed is turning dovish, which clearly proves two points we have been stating for a long time
- Mass Media should be viewed and treated with the same respect one accords to sewage.
- 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
First of all, we hope that the majority of our subscribers are starting to perceive that succumbing to Fear is a dangerous strategy to adopt. Life and investing should not be stressful; stress is something that every Tactical Investor should abhor. Moreover, remember, stress comes down to perceptions; alter the perception and one can shift from being stressed to being serene. Instead of focussing on experts Stock Market Crash 2020 Predictions, understand that so-called crashes should be embraced if you want to retire rich.
Experts love to push the argument that investing is hard and that it takes forever to master this art. Remember that investing is an art, not a science and art is meant to be enjoyed. So are the masses starting to jump on the bandwagon after this strong turn around; the obvious answer would be yes_? The not so obvious answer would be ___? Continue reading, and you will find out 🙂
Investors are sitting on a massive pile of cash, and it is growing by the day.
The masses panicked when the so-called Santa Claus rally failed to materialise. What they failed to spot was 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 fail, proving that our stance to remain cool during the so-called December meltdown (opportunity as far we are concerned) was the right posture to take. Santa Claus did not give presents last year, but he provided us with a fantastic list of stocks to buy at a discount price.
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, 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 of 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 for the role of being used as “cannon fodder” over and over again. 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 all along that the Fed was lying 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 are now going to spin gossip into news. At the moment 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; in fact, the largest number of individuals is in the neutral camp. The current reading; the number of individuals in the neutral camp stands at 37 and bears account for 32; this means that 69% of individuals are still either uncertain or bearish and that has to be viewed as fantastic development.
Stock market Predictions Outlook
We have a triple top in the making on the weekly charts of the Dow and contrary to popular belief, triple tops are not dangerous, they usually signal that the market is gearing up for a stronger move. In the interim, the market can pull back when that zone is tested to create the illusion that a crash is going to follow.
Let’s hope that the news media play their role and broadcast gloom and doom news, for it will hasten the correction. Furthermore, negative sentiment will soar, and soaring negative sentiment usually signals a bottom is close at hand. On the weekly charts, the Dow is trading in the overbought ranges so a pullback at these levels would be justified from a technical perspective, but the monthly charts could be a limiting factor as our indicators are trading in the oversold ranges.
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.
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. We focus on sentiment, and after we have identified what emotion is driving the markets, we move over to Technical analysis to help fine-tune entry points. As we have stated on several occasions, pullbacks should be embraced and the stronger the deviation, the better the opportunity.
Market Timing works, but what most people label as Market Timing we would label as insanity. Experts are hoping to identify the exact top or bottom, and this is precisely why market timing does not work. 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. Extracted from the May 7, 2019, Market Update
Stock Market Crash 2020 Predictions 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.