Stock Market Forecast For Next 3 months: Up Or Down?

Stock Market Forecast For Next 3 months

Stupidity begets more stupidity; it is really surprising to see how the masses still place so much faith in these silly forecasts when it has been proven time and again, that most experts know next to nothing. In fact, monkey’s with darts fare better than most experts; that should give anyone pause for thought.

Hence one should forget what the market will or won’t do over the next 3 months and instead focus on the trend.  The trend is your friend and everything else is rubbish or noise.

One of the major factors we are grateful for is that fact the V readings (indicated by the image above) have not risen for several weeks.  The current reading is still at an all-time high and until it sheds 1000 points we expect wild action in the markets and outside the markets (weather, insane and violent human behaviour and a massive surge in idiotic actions especially in the political arena)

While the masses are far from bullish, the active players that have skin in the game are getting ahead of themselves. While this is a subset of the market, we need to give them a bit more weight than we did in the past, as the masses have been sitting on the sidelines for a usually long period.  If all those that have skin in the game are turning bullish, it is a contrarian signal, albeit short term that indicates the markets is ripe for a pullback.

However, before we continue this pullback has to be viewed through a bullish lens, so keep that in mind.  If you look around almost every market is doing well, stocks, bonds, precious metals, bitcoin, etc. it is very rare to see so many markets performing so well over such a short period, In fact, it is downright abnormal, and this is why we continue to take a cautious approach with this market. Instead of aiming for more aggressive entry points, we are aiming for the most conservative of entry points in 90% of all our pending plays.

Best Time To Open Long Positions Is When the Crowd is Nervous

The best time to buy is when the masses are scared, and the markets appear to be acting erratically. We have gone through similar phases many times in the past; the most recent of which occurred from Nov 2018 to roughly Feb 2019.

We have always stated that when it comes to the markets, discipline and patience are paramount to success, and right now, patience is called for. We will have many opportunities resembling the one we experienced from Nov 2018 to Feb 2019. As far as the masses were concerned the period from Nov 2018 to Feb 2019 was a period of stress and chaos. They always react in the wrong way at precisely the right time.

Sentiment has not changed that much this week; the current readings stand at

Notice a pattern here; the lowest reading comes from the bulls, and when you combine the neutrals and bears it adds up to 64.  In the long run, the crowd is too uncertain for the markets to crash, but that does not mean the markets cannot experience a fast and furious pullback. Too many markets are trending upwards, and certain markets like bitcoin are showing signs of the“feeding frenzy stage”, and lastly, V readings are still at all-time high levels indicating that extreme volatility is something we should all be prepared for. One could, therefore, conclude that the Stock Market Forecast For Next 3 months is likely to be bullish and that all strong pullback backs should be viewed through a bullish lens.

Stock Market Forecast  Jan 2020

We have two groups of players; players that have skin in the game and players that are sitting in cash. The ones with skin in the game are too bullish, and this is clearly demonstrated by the fact that all asset classes are trending higher.  It is almost impossible to envision a situation where bonds, equities, stocks, precious metals, Bitcoin, etc. are all soaring higher.

Hence, something has to give, and when it gives; don’t panic as this will be the opportunity we have been waiting for.  The masses will panic that’s a given, as this is what they are wired to do, but make sure you don’t follow the herd for the herd never wins.  While the Stock Market Forecast For Next 3 months is tougher to gauge due to volatility, the long term trend is clear.  The overall trend is positive and therefore whether you like it or not, the smart move would be to embrace strong corrections with a gusto.

Stock Market Forecast 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 Crash Outlook March 12, 2020

The coronavirus is just the trigger for such an event. If it were not the coronavirus, some other event would have been found to justify the correction. What’s going to happen now is that the masses will panic and regret it when the markets recoup. However, they will then falsely assume that the next mega correction will follow the same path, and when its time to bail out, they will continue to buy, and we all know what happens after that. At a certain point, buy the dip does not work, and that point is reached when the masses turn euphoria.

Backbreaking corrections are always painful; hence the term backbreaking; however, unlike the old days, one can’t tell which correction will turn into the backbreaking event. Look at how many times the market conned the bears over the past ten years into shorting and 90% of those shorts turned to massive losses as the market reversed course just as fast.  Even if you have one big home run, it will not cover the 90% lose rate, and more importantly, we doubt that most of the bears had the staying power to hang in there until their bets paid off.

The markets are controlled by machines now, and these machines are programmed to start selling when specific targets are hit, and one selloff selling triggers another set of selling until the cycle ends. The cycle will end, and the markets will rise for no bull market has ended on a note of uncertainty.  However, keep in mind these machines are programmed by humans; hence, the only difference now is that instead of humans pressing the sell button, machines are doing it.

The media will push massive stories now talking about the upcoming bear market, ignore this noise and focus on one event; the masses were not euphoric when the markets started selling off.

 

The masses are far from bullish, In fact, they are downright panicking and therefore this blood-curling pullback has to be embraced with gusto. The stronger the deviation the better the opportunity. 6 months from the crowd will regret having through the baby out with the bathwater.

Watch with amazement how the hysteria over the coronavirus disappears just as fast as it was created once the objective of lowering rates and approving multi-billion bailouts is achieved. The data on the coronavirus indicates that the high mortality rate is only applicable to older individuals and we are sure when that data is further examined, it will be discovered that these older individuals are not in the best of health. In other words, they probably have existing conditions.

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