Will markets ever fall again?
That seems to be the majority view while everything is in a sharp uptrend. But that is entirely normal. Human nature is hard wired to believe the higher a market rises, the higher and faster it will go. Especially when you are long! Price targets shoot up into the stratosphere when a market such as gold or silver zoom up exponentially.
Yes, many believe we are in a permanent period of levitation (a swift glance at any long-term stock chart should give pause, though).
But that is why they never do! Everyone is on board and all of the previous bears have been chased out of the market. Who is left to buy? We saw this effect in Tesla when the more sober hedge fund operators began shorting the shares years ago as the numbers did not add up – and exited in disbelief with huge losses.
Has anyone seen a bearish article on gold recently? Not me. It’s simple to understand why. In a well-established strong bull run, all those holding gold want to read about how smart they are! They will read why gold is advancing so strongly – and want to buy more.
But this ignores the first rule of investing/trading. You win by buying low and selling high. As the price rises, you need to become more bearish, not bullish. That will enable you to sell at a profit to the latecomers buying near the top.
It’s all about the Fed who are hell bent on destroying the dollar with their policy of flooding markets with tsunamis of ‘liquidity’, so the story goes. Oh, and a vaccine will be available to all by the end of the year. Imagine the boom in activity in this current era of cheap money!
And furlough schemes will go on for ever! No-one need ever work again. Hey – many Americans are taking home more ‘pay’ in lockdown than they were before the pandemic struck. With the pent up demand on all those sofas, the economy will shoot for the moon!
I have no interest in arguing that case. All I am interested in is – how many believe it and has that view become firmly entrenched in the vast majority? Because as sure as night follows day, markets always turn when one view overwhelmingly prevails. As the great trader Joe Granville said: “When everyone believes something is obvious, it is obviously wrong”.
But hold on – here is Kodak after the teenagers discovered it as a hot stock (see recent posts)
Only the very early birds are making profits, so maybe some shares do actually fall. But aren’t the nihilistic teenagers on Robinhood out to destroy their accounts. as I suggested? They are certainly on track with that.
I have accurately followed most of the twists and turns of many markets this year. I have just started VIP Traders Club members on a bear campaign in the stock indexes which I expect to run for weeks/months. The profit potential is massive.
If you wish to join us, take a two week Free Trial to my VIP TRADERS CLUB where we trade stock indexes, currencies, gold and much more. Or take a generous three week Free Trial to my PRO SHARES service where we trade individual UK and US shares .
Is the Fed really destroying the dollar?
This is the overwhelming message you read in the MSM (and everywhere else). But is it true? Here is the multi-year chart of EUR/USD
In fact, the dollar is in a long bull market! Lower highs, lower lows = bear euro/bull dollar market. The recent euro advance is a blip.
With the hit on the major downtrend line, I am preparing VIP Traders Club members for a bear euro campaign.
Can Gold really get to $3,000 – or higher?
This is one of the less outrageous forecasts that are common in the MSM. Because Gold is the ultimate sentiment market, it brings out extreme forecasts when it makes new ATHs. Now, everyone is a gold bug!
Daily Sentiment (DSI) readings now top 93% for days in a row – levels last seen in August 2011 just as it was making the famous ATH nine years ago.
So my question is: Will this August also mark The Top as it did nine years ago?
The high so far is $2,075, and I believe we have reached a high (or nearly so) prior to a decent correction, especially if the dollar begins to rally next week as I suspect.
After this correction, it may make one final leap to new ATHs but that would be the final flourish before a solid bear trend sets in.
I am preparing VIP Traders Club members for this upcoming bear phase.
Is there much more upside for stocks?
It is not a secret that the US stock rally has been powered by a handful of big-name tech shares. As one of these ‘must have’ shares, Apple’s remarkable ascent to the recent high at $458 has produced a stunning fact. Not only does it have the greatest market cap of any share in the world, but it is so huge that it represents almost 90% of the market cap of the entire Russell 2000 index shares combined!
The shares about doubled in 2019 – and has about doubled again off the March Corona Crash low. Here is the stunning chart
Is there any resemblance to the Gold chart? Yes, it’s all the same market! It doesn’t really matter what you buy – it’s all going up (except Kodak).
On August 31, the shares will be split 4:1 – will this news mark the buying climax? The wave labels certainly suggest odds are high a major correction approaches.
I have positioned Pro Shares members short in readiness.