Update May 2021
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 when it comes to the stock market; 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)
Masses are still nervous: Stock Market Forecast For Next 6 months remains positive
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.
Go long when the Crowd is Nervous and Short when the Crowd is Euphoric
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.
Updated Views on Stock Market Forecast for Next 3 Months
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 the 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 gusto.
The crowd is standing on the edge of the cliff, ready to take the plunge and then spend the next 10 years regretting this stupid decision. Remember 2008, well, 2020 is deja vu but the crowd will never learn from its mistakes. They are doomed to serve as cannon fodder for the rest of their lives.
Stock Market Forecast For Next 6 months Update Updated April 2020
Don’t forget to keep a trading journal; the best time to take notes is when blood is flowing freely on the streets.
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 it’s 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% loss 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 Crowd is Still in Panic Mode So 6-month Positive Outlook Still Intact
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.
Article of interest: Stock Market Crash Date: If Only The Experts Knew When
The hysteria surrounding this pandemic continues to rise, even though not one of the scary projections have come to pass. Some individuals are abusing statistics. The flaw in their assumptions is that 0.2% or 1.% of the population will die, that part is fine, but then they assume that everyone will get infected and proceed to work out what a mortality rate of 0.2% to 1% of the entire global population would look like. That is utter madness, why don’t they apply the same figure to the flu, if they did, the mortality rate from 450K (last years figures) would skyrocket to the millions. It does not work that way, and these gungho shock-jocks are twisting data to suit their own needs.
The stronger the deviation the better the opportunity. 6 months from today, the crowd will regret having through the baby out with the bathwater.
Stock Market forecast for next 3 to 6 months July 2020 Update
The markets rally on bad news and go ballistic on any news that offers a small ray of hope. We are definitely in a market that has no real order (the market of “disorder” is the new label for this bull market). On the surface, this might appear discerning it’s actually a good long-term development for it will keep everyone guessing as to where this market is heading.
This was the smallest bear market in history, and it was killed before it could even gather traction. In the end crowd always losses; remember that the next time the experts state that markets could crash and burn; the only thing that goes up in smoke is the egos of these shady experts.
Given the current reaction from the Crowd, the coronavirus pandemic is going to be forgotten overnight, but the damage for those that gave into fear will last for years to come. Some will never recover, but that is a story for another day. The Dow appears to be headed towards 28K; as there is only 1K separating it from this target as of the current price. Now is an excellent time to sit back and dwell on how you felt back in March when the markets were crashing and when we repeatedly stated that this was nothing but a manufactured crisis and the markets would recover. We are now only 3K away from Dow 30KThis was the smallest bear market in history, and it was killed before it could even gather traction.
No market can trend in a straight line so on a point basis, the longer the Dow takes to pull back the stronger the correction. Initial data is suggesting that the days of minor corrections are over. We could be in for a new era in terms of market moves; sharp down days followed by even sharper reversals. Hence, the overall theme should be to view every sharp pullback through a bullish lens.
The coronavirus selloff was a mass hysteria based type event. The masses threw the baby, the bathtub and everything in out in their haste to seek safety. The end results they were handed their heads on a filthy tin platter.
Stock Market Forecast For Next 3 months May 2021 Update
We have said this 100’s of times in the past and will probably have to state it 100’s times more over the years. The mass mindset is wired to lose; they buy when it’s either time to be cautious or when it’s time to sell. Once again, ask yourself this simple question; why do you feel the urge to jump in when everything looks rosy and the urge to flee when everything appears sour. You will never advance and become a successful trader if you can’t answer that question honestly. Sounds harsh. Well, the market is not a place for traders who are unwilling to adapt to changing conditions. It takes no prisoners; the only adage that applies to the markets is “adapt or die”.
Only the patient investor makes money; the impatient investor or the one that overtrades would be better served if they put their money in an index fund and allocated their free time to drinking beer or mowing the lawn. Riches don’t come to fools, so while we have received many emails asking us to take on a more aggressive stance, our response is no way, Jose. We don’t follow the playbook of the masses, and if we did that, we would not be here 18 plus years later. Having said we will continue to issue entry points on stocks that we deem will make for good long-term plays. These individuals asking us to take a more aggressive stance now were the same ones that panicked when we said it was time to buy during the COVID crash. Once again, ask yourself why you want to buy when it’s time to be more cautious and when it’s time to buy you panic. The truth will set you free, but before it does, it will hurt like hell. And remember if you add an O to Hell you get Hello.
Articles of Interest
Hot Money is here to stay (Sep 2)
BTC vs Gold: The Clear Winner Is … (Aug 11)
The Crowd: A Study of the Popular Mind: Gustave Le Bon: http://www.gutenberg.org/ebooks/445
Five warning signs of market euphoria: Investopedia: https://www.investopedia.com/5-warning-signs-of-market-euphoria-4775527
Why people lose money in the markets: The Balance: https://www.thebalance.com/why-people-lose-money-in-the-market-4144737
Homerun definition: The free dictionary: https://financial-dictionary.thefreedictionary.com/home+run
What is the media: OER services: https://bit.ly/2ZYfRFv
Prepare for massive stock market opportunities: Market Watch: https://on.mktw.net/32QvqB4
What is mass hysteria: Medical News Today: https://www.medicalnewstoday.com/articles/322607