Stock market crash; best time to buy stocks

 

Stock market crash; best time to buy stocks

The greater the deviation; the better the buying opportunity

To illustrate this point we drew in a long-term trend line. Please note that this trend line has nothing to do with our trend indicator.  The deviation factor is better seen with standard deviation bands. There are many software programs on the market that will automatically fill in the SD bands; Ideally, the setting should be set at 3SD from the norm. When the markets touch these ranges (and the trend is up), then backing up the truck is the thing to do.

A stock market crash is the best time to buy stocks

Big charts do not allow you to change the settings to 3SD. The settings are fixed at two standard deviations.  Despite this limitation you immediately spot two great opportunities; one was in 2003 and the other took place in 2009, clearly proving that the title of this article is valid. If the trend is up; then this is almost a green light to backing you the truck and buying every top quality stock in sight.

Stock market crashes should be viewed through a bullish lens

But how do you get out of the market the right time, First of all, forget about trying to time the exact top, instead focus on the emotion? When the crowd turns euphoric, it is time to take money of the table and tighten your stops.

Pay attention to our trend indicator and proprietary sentiment indicators. The trend is still up. Therefore all strong corrections have to be viewed through a bullish lens, regardless of personal biases.

This is an old bull market, and it continues to trend higher because the crowd is still nervous and the most individuals think this market cannot and should not trend higher; that is why it probably will continue to trend higher.  For almost two years we have been stating that this bull market would trend higher than the most ardent of bull’s expectations; that appears to have come to pass.

V Readings still at dangerous levels

Once again V readings remain unchanged, something that has never occurred since this indicator came into being.  For the month of June the readings have not budged at all; perhaps this is a prelude to a well-deserved correction.  However, until this index pulls back, we can expect volatility in the markets, weather and human behaviour.  Thus expect the era of politics and gossip on steroids to gather even more traction.

History never changes; the markets will experience one very strong correction before this bull keels over.  The problem is that the masses have been waiting for a strong correction since roughly 2013.  The ironical part is that the markets will pull back strongly, but most likely they will be trading at a higher level than they were at 2013. In 2013 the Dow was trading in the 12,800-13,000 ranges.

While it is possible that the Dow could drop to this level, it is a low probability event as the masses are far from Euphoric at the moment.  Most likely the Dow will shed 25%-30% from its highs. Assume the Dow trades to 22K; at the extreme end, the Dow could drop to the 15,600 ranges.  Market Update June 18, 2017

Crowd is still too anxious for the Stock Market to Crash

Until the trend turns negative, we can only make educated guesses regarding the intensity of the next correction. If V readings are above 4200, then the markets will overshoot to the downside as they have done so far to the upside.  As Fiat money rules the world, even more, money will be poured into the next created financial disaster, which will eventually push the market to new all-time highs. Until the people reject Fiat, the Fed will continue to create boom and bust cycles purposely; that is their primary agenda. Examine the history of the Fed, and you will see that they have gone out of their way to create these cycles. As the volume of the money supply increases the intensity of these cycles will also increase.

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