We are just below one Gann line on our gold Gann chart.
OEXTrader.com
August 6, 2023
181,
if GLD is in a downtrend we should see 181 turning back rallies. Would
be bullish for gold if we break above 181, and the number holds.
OEXTrader.com
July 30, 2023
Has
been a while since we looked at our VIX Vidya chart. Is there a news
event out there, that might bring VIX back up to the 26 level?
OEXTrader.com
July 23, 2023
Knocking on the door at a 184 on GLD. Will bulls be rewarded with a move higher above 184?
OEXTrader.com
July 16, 2023
This GLD weekly Vidya chart has the 180 level, as key support for a possible move higher for GLD.
OEXTrader.com
July 7, 2023
Our
GLD Fibonacci chart is still oversold, with lower indicator just above
the zero level. Couple that with the GLD volume indicators I have been
showing, we may have already bottomed. A move above above the 179 may
confirm.
OEXTrader.com
THE REAL ESTATE BUBBLE: FROM A TECHNICAL ANALYSIS POINT OF VIEW
Understanding The Market Cycles
My
focus usually lies with stock indexes, sectors, and commodities, but
today, we venture into the real estate market. Real estate is a market
that many people don’t fully comprehend. Many are excited by the robust
housing market, believing it’s never been a better time to buy. But the
reality is, I believe we’re in a phase that isn’t ideal for such
investments.
Taking a leaf from Stan
Weinstein’s book, he proposed that the market has four stages: Stage 1,
where active investment capital isn’t advisable due to the choppy,
flatlining market; Stage 2, the bull market phase; Stage 3, a volatile
phase where struggle reigns; and Stage 4, a phase marked by a massive
decline. Stages 2 & 4 are usually an easy time for investors to
make money. But in Stages 1 & 3, it becomes harder to grow your
capital and much easier to lose a hefty portion. This is the crucial
time to preserve and protect your wealth for reinvestment when
conditions improve.
Looking
at this chart from Wolfstreet.com, multifamily starts (buildings with
five units or more) are at the highest levels since 1986. This surge
might look impressive, but historically, these sharp upticks are often
followed by multi-year pullbacks in price. This pattern was evident in
2008 when, after reaching new highs, the stock market began to sell off
significantly.
Why are multifamily
starts skyrocketing now? Because savvy investors are trying to squeeze
more money from an overpriced real estate market. Multifamily housing
is cheaper to build, with rental units being more affordable for those
with financial constraints.
The last time we saw a similar spike was in 2015, followed by several years of slowed housing starts as the market softened.
Single Family Starts: The Early Warning Sign
Now
let’s turn to single-family starts. Despite the bullish predictions in
the market, technical traders can clearly see the trend. There has been
a series of lower highs and lower lows since June 2021. This pattern
was seen previously in 2006 before housing peaked and began to weaken.
The
current trend for real estate is downward, but the recent rally has
masked this, bringing it back to the levels seen in 2020.
Total Starts: A Glimpse Into the Future
Taking
into account both multifamily and single-family starts, we see a
similar series of lower highs and lower lows. This trend signals an
overall weakening in the real estate market. The current spike is
probably the last push, with potential struggles ahead for contractors
once this wave of homes has been built.
The Real Estate ETF (IYR)
Shifting
our focus to the real estate ETF IYR, we notice a clear series of lower
highs and lower lows. Savvy investors who invest in these REITs
understand that the real estate market is exhausted and struggling.
Looking
at the chart, we can see a similar pattern from 2008. The market
experienced a major sell-off, followed by a tight channel, before
plunging dramatically.
Home Builders: A False Hope?
On
the other hand, the Home Builders chart seems to tell a different
story. Investors and speculators are piling into the housing building
space, creating a FOMO (Fear Of Missing Out) atmosphere. This surge may
feel promising, but it’s important to remember that this is likely the
peak before a significant drop.
The Future of Real Estate:
So
that’s what I see unfolding with the real estate market. I think things
will continue to get tough, and over the next year or two, we will be
looking at a very different market, a very different world. To me, it’s
best to be prepared for that and be smart with your investing. It means
being able to protect your wealth, grow your capital safely and thus be
able to take advantage of opportunities when they arise.
Technical Trading
I
want to touch on the importance of understanding technical trading and
chart analysis. Many people dismiss technical trading, thinking it’s
just looking at squiggly lines on a chart. But in reality, it’s about
understanding supply and demand dynamics, market psychology, and
economic cycles. By taking a look at the charts of these real estate
ETFs, REITs, and homebuilder stocks, you can see very clear trends and
patterns that tell us a lot about what’s going on in the market. This
knowledge, in turn, allows you to make more informed investing
decisions.
So if you’re not already
familiar with technical trading, I highly recommend taking some time to
learn more about it. It’s not a perfect science, but it can give you a
very helpful edge in the market.
I
should also note that 81% of personality types do not favor investors.
Meaning your brain likely does not function and process data and
emotions in a way that allows you to make money easily like those with
a favorable personality. I cover that in detail in anotherarticle post.
In Conclusion
In
conclusion, I believe we’re on the brink of a significant downturn in
the real estate market. I also believe that savvy investors who
understand the cycles of the market and who are able to preserve their
capital will be in a great position to take advantage of the
opportunities that arise during the downturn. Remember, investing is
not about timing the market perfectly; it’s about being prepared and
making intelligent decisions based on the information you have at hand.
That’s
all I have for today, folks. Remember, be smart, stay informed, and
always be prepared for whatever the market throws at you. Keep an eye
on the charts, keep an eye on the news, and never stop learning. The
more you know, the better prepared you’ll be for whatever comes next.
This is Chris Vermeulen from TheTechnicalTraders.com, signing off. Stay safe and happy investing!
I would want to see the 170 level holding if we continue down.
OEXTrader.com
June 26, 2023
Our gold volume chart may have sold off enough to lend a bullish start for the week.
OEXTrader.com
June 18, 2023
Out of curiosity, I checked what the Gann daily lines look like on the weekly gold chart.
OEXTrader.com
In
the dynamic world of trading and investing, the Covid-19 pandemic has
served as a transformative catalyst. Market behaviors, trader
attitudes, and even commonly used indicators underwent seismic shifts
during this period.
In this discussion,
we delve into the multifaceted comparison of trading and investing
practices before, during, and after the Covid-19 pandemic, focusing on
the put-call ratio, cycle analysis, and their influences on stock
market trends.
Pre-Covid Trading
Before
the pandemic, trading was characterized by an element of predictability
and stability. The market was largely navigated by seasoned traders who
relied on a mix of sentiment, fundamental, and technical analysis.
A
useful indicator was the put-call ratio—an index that offered insights
into market sentiment by comparing the volume of bearish put options to
bullish call options. This ratio was a reliable barometer of overbought
and oversold market conditions, hinting at times when the market was
excessively optimistic (frothy) or pessimistic.
In
an overbought scenario, for instance, the ratio would be skewed towards
calls and would have a low value, often leading to market corrections
and providing savvy traders with cues for profitable entry and exit
points.
Trading During Covid 2020-2022
With
the advent of the Covid-19 pandemic, the stock market experienced an
influx of new participants. As lockdowns were implemented globally,
traditional avenues for entertainment and engagement were suddenly
curtailed. Consequently, a myriad of individuals, many of whom were
novices, pivoted toward the stock market.
Interestingly,
these new market participants demonstrated a marked propensity for
risk-taking, often opting to buy call options. This surge in call
options buying—partially due to their relatively low cost and high
potential return—significantly distorted the put-call ratio, driving it
below its typical range.
During this
period, the put-call ratio lost its utility by mid-2020. The usual
overbought and oversold signals it generated became unreliable due to
the influx of inexperienced traders and the consequent rampant
purchasing of call options.
Trading Post Covid Put-Call Ratio
In
early 2022 after the majority of novice traders lost money from falling
prices in growth stocks and gave up, the put-call ratio returned to
normal. As global societies gradually adjusted to the realities of a
post-pandemic world, so too did the stock market. The put-call ratio
climbed back to its prior averages, once again serving as a useful tool
in identifying potential market tops and forecasting corrections. With
the options market behavior reverting to more predictable and
recognizable patterns, we can effectively apply technical analysis and
anticipate potential pivot points with the options market once again,
as seen in the chart below.
After Covid,
the QQQ has exhibited an interesting trend where the put-call ratio and
a cycle market top signal have aligned for the first time together.
Given that the average market correction post-Covid has been
approximately 18.5% to the downside, this unprecedented alignment of
signals suggests that a similar pullback could be imminent.
Trading The QQQ Pre-Covid
The
NASDAQ (as represented by the QQQ) was characterized by standard
cyclical behavior. Using techniques like cycle and intermarket
analysis, traders could effectively identify times when the market was
oversold or overbought. The typical market correction during this time
was roughly 6%. These insights informed a technical trader about
possible pullbacks or market advances, contributing to strategic
decision-making processes.
The Double Sell Signal For QQQ
Analyzing
the QQQ provides valuable insights into the stock market’s health. A
unique phenomenon has been observed in the post-Covid market, where the
put-call ratio and market top signals from the QQQ align. The put-call
ratio, falling below its established average range, indicates a market
teetering on overbought conditions. Concurrently, the QQQ cycle and
intermarket analysis are giving me a topping signal as well.
Despite
the broader market’s positive momentum, signs of divergence have become
noticeable. Major indices are primarily propelled by a handful of
heavyweight companies, masking the underperformance of individual
stocks in the broader market. As these market leaders begin to lose
momentum, the market as a whole could face a significant pullback,
ranging from a 6% to 26% drop in the coming weeks.
The
fed and other economic data could send stocks into a final exhaustion
push higher. If that happens, it means an even sharper correction
afterward is likely to take, so be aware, and don’t get sucked into the
market just before it reverses.
How to Trade Rising and Falling Markets
Trading
in bull and bear markets requires distinctly different strategies. In
bull markets, the focus is on identifying potential market tops and
managing positions during pullbacks. In contrast, in bear markets,
traders look for signals indicating that the market is oversold and
ready for a bounce.
Rising markets are
fairly simple and much slower than falling prices which are violent and
require active intraday position management. Also, different sets of
data and indicators are needed to trade rising and falling markets,
which is where most individuals get things wrong. They use the same
strategy in totally different market environments, and that’s a recipe
for underperformance and substantial losses.
How You Can Trade And Invest Differently
Trading
and investing are lifelong learning journeys. Developing a
comprehensive understanding of market dynamics, technical analysis,
position management techniques, and having the proper expectations are
the keys to enhancing your trading and investing success.
Two
valuable techniques are cycle and intermarket analysis, for
understanding market ebbs and flows, and the other is position and risk
management. If you like to learn, two books worth considering are “Asset Revesting” and “Technical Trading Mastery.”
The former delves into a growth-centric investing approach that avoids
depreciation and manages positions, and the latter provides
foundational knowledge for those aiming to become a proficient
technical trader allowing you to identify trends, oversold, and
overbought market conditions.
The
effective style of investing that I use is asset revesting—investing
only in assets that are rising. This strategy helps to avoid holding
assets that are depreciating and minimizes exposure to significant
losses, enabling your account to consistently grow and hit new highs.
In fact, during 2022, when nearly all investors were down 15%- 25%, theCGS Asset Revesting StrategyI
followed kept growing my account, reaching new high watermarks every
few months. Asset Revesters and I know the value this style has over
the traditional buy-and-hold method and cringe every time we hear of a
retiree who has their life savings tied up in a diversified
buy-and-hope strategy.
ManagingRisk VS. Buy-And-Hold Investing
Simply
put, asset revesting is the total opposite of buying-and-holding. Its
number one goal is to protect your wealth and lifestyle first, then
look to generate profits second. It just happens that by avoiding big
losses, the returns with this strategy are nearly 3x that of the
traditional method. As of this week, my asset revesting strategy locked
in more profits pushing our accounts to new all-time highs yet again.
Concluding Thoughts
By
using appropriate trading and investment strategies for the current
market conditions, you can improve your market performance and reduce
your risk and losses. Remember, while the market’s overall trajectory
is still upward, preparedness for corrections is vital as it could be a
correction of 5% or 50% – no one knows until after it has happened.
That is why it’s crucial to have an exit strategy and to take profits
when signs point to a potential market correction like this. The goal
is not just to survive but to thrive in any market condition, which is
what I have been doing for over two decades through the use of
technical analysis, position and risk management, and asset revesting.
In my next article I will cover some eye-opening charts of the next major trend to take advantage of, so stay tuned and join ourfree alerts newsletter.
Our gold volume chart looks to some moving average support. Up may be the easiest path.
OEXTrader.com
AN INVESTING STRATEGY SILENTLY MAKING MOTIVATED PEOPLE WEALTHY
Let
me start with a short story of my experience and why I can’t give you
the uncompromised retirement you dream of, I can’t protect your wealth,
and I can’t protect your lifestyle unless you genuinely want a better
life for yourself.
Many years ago,
I purchased a course on how to become an online millionaire. It cost me
thousands of dollars, and I rounded up all my friends. I told them
about it, and they all joined me, and we took the course together as I
wanted to be rich with all my best buddies.
The
sobering thing was near the end of the course. This guy had a section
talking about energy suckers. This coach went on to describe the
average person and their lack of drive/grit to want to become
successful, live a full life of fun, and give back to the world and
help others. He continued talking about how millions of people buy
courses like this every month, watch them, and never complete the
step-by-step processes to become successful. That is exactly what I
experienced with almost everyone. Out of 9 people who joined me in
taking the course, only one other person took action and turned their
idea and passion into a monthly income, and the rest of them faded away
into the sunset…
My point here is that I
spent a lot of time and effort trying to keep everyone motivated to
live a better life, and it was exhausting and sucked the life out of
me. I quickly experienced what the coach was talking about when he told
us to stop helping energy suckers and focus on helping ourselves and
those who can carry their weight and don’t need to be motivated to be
successful.
So, shifting gears back to investing… Over
the last few years, I have shifted away from trying to satisfy
short-term aggressive traders demanding big returns, lots of trades,
and who crave the adrenaline rush of being in fast-moving stocks, to
individuals who appreciate consistent above-average growth without the
rollercoaster ride and value strategies that require little to no time
or experience to use and protects their capital from big losses.
Aha, Moments!
Have
you ever had one of those lightning bolt moments in your life? The one
where a particular word, phrase, experience, or event changes the
foundation of your very being going forward? Something where your
current understanding of how something works is cracked open, and new
information and possibilities pour in?
I
had one of these not too long ago. It had to do with the style of
investing that I believe in and practice daily. You’ve likely all heard
of the financial industry’s traditional Buy-And-Hold, Diversification,
60/40 Portfolio, and Dividend-Based strategies, yes?
Although aspects of each of these can sometimes be beneficial, the strategies, in their entirety, never made sense to me.
Why hold onto an asset that is tanking in value, taking all your recent gains with it?
Because
it’ll eventually climb back up to previous highs? Sure, that’s
possible…if you have enough time to wait for that ambiguous ‘someday’
to arrive.
Because holding a little of a whole
lot of assets will ultimately create a balanced portfolio? Okay, that
could work if the deadweight assets were trimmed off.
Because
holding more bonds than stocks as you get older decreases portfolio
volatility and limits losses? Ummm, not when the bottom drops out of
the bond markets when interest rates rise.
Because
dividends ensure you are always paid something for your investments? I
can’t argue that. But if your assets drop more in value than you get
paid in dividends, your account balance is still decreasing, which
defeats the point.
Some say that
most of these pitfalls can be avoided by having a good financial
professional manage your account. I say this is absolutely true…if you
have found someone who is fiducially bound to their clients, they are a
technical analyst, they actively manage positions and risk, and they
don’t believe in the buy-and-hold strategy because of its dangers.
Suppose your financial professional does not have these skills and
beliefs. In that case, there is a high likelihood that your account is
suffering from AUM, aka paying a high-cost fee to have yourAssetsUNDERManaged.
Though
we would like to believe otherwise, many financial professionals become
extremely successful by doing the least amount of work possible. If you
think about it, should rebalancing a portfolio each year really cost
1-2% of your life saving? To put some numbers into this example, say
you have $1,000,000 in your portfolio, and it is rebalanced twice a
year with the AUM (traditionally – Assets Under Management) fees at 2%.
That is a cost of $20,000. Your account must earn at least that much in
a year just to break even, never mind actually increase in value.
Lightning Bolt #1 – Buy & Hold Investing Is Dangerous
Back
to my lightning bolt moment – one of the earliest lessons I had after I
began trading and investing was that just because I loved an asset does
not mean it loved me back. It did not care that I spent hours
researching and learning all I could. It did not care that I was 100%
convinced that its next move was up and to the right. It did not care
that I had poured my entire account balance into supporting my belief.
When that asset tanked, it took me down with it…hard. And it was the
best thing that happened to me – though I certainly didn’t think so
then.
Fortunately, I
learned this lesson fairly early in my career. I opted to leave the
investment alone because there was not much left to lose. Instead of
turning a ‘paper loss’ into a ‘realized loss,’ I decided to let it be
and, in the process of doing so, learned another valuable lesson. I had
youth on my side. I had time for the investment to hit rock bottom,
stabilize, and then begin its decade-long climb back to previous highs.
By the time it did, I was a much savvier investor and had moved far
away from the buy-and-hold strategy to build wealth faster and sustain
my wealth and lifestyle.
So lightning
bolt number one – was to be sure I don’t hold onto assets falling in
value and delay growth and my retirement for no reason other than
laziness and/or lack of education from whoever is managing our money.
There are many false beliefs in the financial industry in what we are
told by so-called professionals, and this articleabout missing the biggest stock market rally days is an eye-opener.
Lightning Bolt #2 – Market Trends and Cycles
For
decades now, I have not believed in owning assets that were decreasing
in value. Now, when I say this, I don’t mean the small intraday
movements of stocks, bonds, or commodities. Instead, I am referring to
larger multi-month price trends. When an asset has enjoyed a nice
run-up and has begun to reverse its trend, I do not believe in holding
those positions and watching my wealth fall with them. Why on earth
would I do that? I would rather swallow my pride and sell the asset,
even at a small loss, than take a big loss that is life-changing just
because we, as investors, have been falsely told that the buy-and-hold
strategy is the best long-term strategy which is not true. By doing
this, I have protected my capital so that I can reinvest it another day
– like when the market bottoms and starts a new rally. Then, I can buy
back into the asset with the money that, had I stayed in, would have
been lost. You can downloadmy market trend and cycle infographic here.
The
struggle I was having was relaying this information to people in a
clean and concise way. What I mean by that is, when you hear the term
Buy-And-Hold, you know exactly what that means without being told. And
the same thing goes with Dividends or Diversification strategies, and
we know what they are. In another article, I go into more detail about
just how poor of an investing strategy diversification is for anyone
45+ years of age in thisarticle.
These
strategy names have been mainstays of the financial industry longer
than most of us have been alive and, thus, rarely need to be defined.
But this is not what I do. I needed to create a term that myself and
others could identify and understand for the style of investing that
can protect investors capital, and grow it faster, which I believe in
and have been doing for over 20 years. So, my team and I put our heads
together and wordsmithed our way to an answer – Asset Revesting!
Finally, A Name To A Face – Asset Revesting
So, what is Asset Revesting exactly?
Allow me to break it down to its simplest definition. An ‘Asset’ is
anything a person would purchase that they believe will hold its value
or increase in value. Examples include precious metals, real estate,
stocks, bonds, ETFs, vintage cars, stamps, bitcoin, etc.
Revesting
is a combination of a couple of words. It is ‘Divesting’ yourself of an
asset that is falling in value and ‘Reinvesting’ the money into
something on the rise. Hence, Asset Revesting. A style of investment
that is straight-up common sense.
Asset Revesting: · Exclusively holds assets rising in value. · Sells assets that are decreasing in value. · Sets risk management rules to protect capital. · Deploys position management to limit losses and lock in profits. · Will hold cash as a position when all other assets are falling.
Have
you been doing this all along? If so, you may just be an asset
‘Revester’ and didn’t know it. As ‘Asset Revesting’ is a newly coined
term, the people currently managing their investments in the
aforementioned ways are already ‘Revester’s.’ It turns out I’ve been
one for decades!
Should You Consider Becoming An Asset Revester?
My
answer to this is simple. Becoming an asset revester means you will be
ahead of the game throughout most of the journey to retirement. Instead
of watching your portfolio buckle under the weight of unexpected
selloffs, you will be out of your positions and safely in cash. It’s
also possible to profit from falling prices, which is how we as
investors can supercharge returns.
I am
not one to blow sunshine where there shouldn’t be any. Do we have
trades that don’t work out – you bet, but do all of our trades have
profit targets and protective stops in place to manage risk,
ALWAYS!
The reality is that there
is always some inherent risk when it comes to trading and investing,
and you need to both prepare for and expect that. A position needs room
to breathe, but that doesn’t mean we give it a mile when an inch will
do just fine.
2022 was a
hard one for many retired people. The bond market, traditionally a safe
hedge-type play against the stock market, collapsed, taking countless
retirees with it, forcing them to cut back on spending and downgrade
their lifestyle. For my part, hearing the stories of so many people
(family, friends, subscribers, strangers) who had followed the advice
from their financial professional, or relied on the historical
performance of their portfolio (forgetting that they were in a
different phase of life than they were in the last big market reset in
2008), just made me cringe, and want to help as many investors possible
from happening again.
I narrowed my focus on soon-to-be or already-retiredfolks who
simply cannot afford to weather another multi-year recession using the
diversified buy-and-hold strategy. These people are my parents. They
are my wife’s parents. They are my neighbors. They are members of my
Technical Traders community. They are strangers whose stories I have
heard. My mission is to help as many investors as possible avoid and
even profit from the next major financial reset in stocks, bonds,
commodities, and even real estate. This is the worst possible time for
the majority of investors to lose another 20-50% of their wealth and
then have to wait 5-15 years for their accounts to recover.
Now,
I share my asset revesting signals to follow, and I even encourage you
to have them autotrading in your brokerage account at no additional
cost.
Imagine if you could have rotated
your capital into the best asset at any given time during covid.
Rotating out of stocks, into bonds, then waiting in cash until stocks
bottomed, and then re-entered the stock market for big gains and no
losses?
Imagine
if you could save $5000, $20,000, or even $50,000 a year in advisor
fees while having your retirement account value protected and growing
in all market conditions, and have this done for a small flat fee? This
is what investors in over 130 countries are doing with some or all of
their investment capital and are enjoying the journey with me.
It works with account sizes of $50,000 or more,
and you trade the signals in your self-directed brokerage account or
have the broker autotrade the signals for you with the simpleannual newsletter subscriptionfee.
If you have any questions feel free tocontact me, I’m here to help!
Chris sits down with Charlotte McLeod of Investing News Network, who kickstarts the session with a high-level look at gold.
to
talk about where the markets were and where they may be going next.
Through the lens of technical analysis, Chris & Craig discuss the
answers to the following questions:
What
do the charts indicate could be coming down the road for gold in the
short and long term? And how does the recent fed rate increase affect
its trajectory? Will a recession send gold into another stage 4 decline?
Using
technical analysis, what does a double or triple top mean on a price
chart? Does the resistance level mean that price is likely going to
head to the up or downside?
Will a financial reset actually be good for precious metals and miners?
Generally,
the idea is to buy low and sell high. Is it a good idea to buy
something at a higher price when it is trending up? How do emotions
play into accumulating physical metals?
Why is there
such a disconnect between gold and silver? What needs to happen for
silver to break out and catch up with gold? And why is silver more
volatile than gold?
What does a financial reset in the
economy actually mean? How long will the complacency phase last? The
last two stage 4 declines were the Tech Bubble and the Financial
Crisis. These are very serious and potentially dangerous market
conditions if investors are not prepared.
How important is it to understand what overall market stage we are currently in?
What effect will the news around bank failures have on gold and silver prices?
On May 15th, there are some exciting things happening!
Next up – the SECOND EDITION of my book Technical Trading Mastery – 7 Steps To Win With Logic will
be published. This edition is totally revamped. I actually cut out
about 150 pages of fluff and just get to the meat and potatoes of what
you need to know, figure out, and I share two of my foundational
trading strategies for you to implement and build on (momentum and
swing trading) complete with my indicators, values, and guidelines to
implement the next trading day. The book is now only 120 pages, full of
charts, and should be a quick, and motivating read to get you thinking,
seeing, and trading successfully with the market trends.
The QQQ's are bullish for stocks, as long as we see the weekly Elder Ray average holding 308.
OEXTrader.com
MISSING THE BIGGEST STOCK MARKET RALLIES – ARE THEY WORTH THE AGONY FOR THE BUY-AND-HOLD INVESTOR?
Reading Time:9minutes
I
have read so many articles recently from the investment industry and
the so-called financial professionals about what happens to your
investment account value if you don’t follow the buy-and-hold
method.
What
I have learned is just how good some professionals are at making people
see precisely what they want them to through the use of misleading
titles, graphs, and averages. The findings extrapolated from the
presented scenarios can be downright unethical when you dig just
beneath the surface. For example, if you consider the emotional and
financial pain, stress, and anxiety, that a retiree holding falling
assets during bear markets or recessions experience, especially when an
unrepentant financial industry led them to believe everything would be
A-OK, it is unacceptable.
Some study titles, angles, and quotes used to make you think the buy-and-hold strategy is the only option for investors are:
If you miss the best ten days in the stock market, you miss half of the growth.
Why you will miss the best market days if you sell during high volatility.
To make money in the stock market, do nothing, just hold.
Time, not timing, is what matters.
Before
I really get into the meat of this article, let me state one quick
thing. I do think the buy-and-hold strategy can be a valid option for
young investors with smaller investment accounts and who have a 30+
year investment horizon. But if you are nearing retirement or are
retired already, you don’t have “time” on your side. During bear
markets or recessions, Buy-and-Hold morphs into the Buy-and-Hope
strategy, and hope should have no place in an investment portfolio. If
you plan or need to withdraw capital to subsidize your retirement
during this time, you will compound your problems and suffer from a “sequence of returns risk,” which is the most damaging thing to a retiree’s financial future.
So
why does the financial industry do this? Well, the system is built
around managing money in a way that is simple, can be sold to the
masses generationally, and can leave your money in the market for 10,
20, 40+ years with minimal adjustments and all the while collecting AUM
fees. To a technical trader and
investor like me, AUM stands for “Assets Under Managed.” My 13-year-old
daughter could do the math, put 60% of a portfolio into an index ETF,
the other 40% in a bond fund, and then check on it once a year to see
if it needs rebalancing. It’s not rocket science. I know investors who
are paying $35,000+ a year in advisor fees, and they lost about
$750,000 in 2022 following so-called ‘professional advice.’
Multimillionaire investor Jim Rogers said: “Diversification
is something that stockbrokers came up with to protect themselves, so
they wouldn’t get sued for making bad investment choices for clients,
and that you can go broke diversifying.”
Another
reason the advisory industry pushes out content like this is that if
the professionals all support it, then to the average investor, it
looks like the diversified buy-and-hold method is the right and only
way to manage money. But the reality is diversification is the best way to suffer from
volatility and have status quo returns like every other hoodwinked
investor who remains uninformed about technical analysis and asset revesting methods.
Getting
back to one of the titles mentioned earlier, if you are curious about
when the best days in the stock market actually happen and how it can
alter your future, then you should find this article helpful.
It’s
easy to think that these days occur when stocks are surging higher in a
bull market, but is that, in fact, true? It turns out that it is…and it
isn’t.
Chances
are that in a clear bull market, whatever strategy you are using, be
diversified buy-and-hold, technical analysis, fundamentals, etc., your
account will be on an upswing. It’s a time when many individuals loosen
the reins on the rules and opt not to lock in profits along the way,
instead choosing to try and increase their returns more dramatically.
Or they may neglect to set protective stops believing that they can
figure it out and deal with it later when price starts to weaken. When
this downturn inevitably begins to happen and is confirmed on whatever
news source an investor tunes into, it is at that moment most people
apply risk control measures, like a stop loss order, to protect their
money. Unfortunately, by this point, it is often already too late.
I
should quickly and steadfastly note that delaying protecting your
position and capital is NEVER a good idea. It is ALWAYS better to make
the first thing you do after entering a position is to set a protective
stop and control your risk. Bad things happen, and they generally
happen fast in the markets. If you are not around to exit a position,
it could be very costly.
In
a bear market, the answer is not so cut and dry. For example, let’s
take a moment to examine the following finding:
“About
42% of the S&P 500 Index’s strongest days in the last 20 years
occurred during a bear market. Another 34% of the market’s best days
took place in the first two months of a bull market—before it was clear
a bull market had begun.”
Source: Ned Davis Research, cited by Hartford Funds
An
investor who is weathering the storm brought on by the buy-and-hold
strategy during a bear market is likely to cling to these big rally
days as though it were a life-saving ring. As I see it, though, the
problem is that the life ring is not attached to anything. There is no
dock, there is no ship, there is no land, and there is no one to pull
you to safety. There is just you, bobbing away.
Will you stay in that environment forever?
It is unlikely. If you can hold on long enough, the tide will
eventually turn, and the stock market will turn bullish again. Your
accounts will creep higher, and the day will come when you celebrate
breaking even. Time will pass, and you will hit new high watermarks and
think, ‘Let the good times roll’! The memories of financial ruin,
desperation, fear, stress, and anxiety will fade, and the cycle will
begin again.
Let’s
take a few minutes to dig deeper into the quote above to see if holding
stocks during those big rally days during a bear market is worth
holding on to. Given the fact that 76% of the strongest days in the
stock market occur within bear markets and during the early Stage 1 bottoming phase, it should be the first red flag that what the financial industry preaches may not be the holy grail strategy they say it is.
Think
about it. During a bear market, when prices are falling 1-5% per week
over many months, who really cares if there is a 5 – 10% rally in the
price of stocks if the price is still lower than before the bear market
started. You are still losing money, and all those short-term rallies
do is give panicked investors false hope that the market has bottomed
and is starting a new bull market.
The
same can be said for how the industry claims dividend reinvesting is a
great low-risk method to build wealth. Again, nothing could be further
from the truth. If an asset price plummets by 30%, is a 2% dividend
payout going to make you feel richer? Does it make up for the huge
decline in your life savings at a time you need it the most?Dividend stock investing is how you achieve status quo returns.
I
want to take a moment to walk you through an actual investment
scenario. For this example, I will assume that a $1,000,000 account was
invested in a diversified portfolio of assets that tracked the
performance of the S&P 500 index. The investor used the
buy-and-hold strategy through the market peak of the Dot-Com peak and
held through to the break-even recovery level many years
later.
The
Dot-Com crash began in March 2000 and lasted until October 2002. During
this period, the S&P 500 index fell by approximately 49% from its
peak to its bottom. In this case, the S&P 500 index did not return
to its March 2000 peak until September 2007, approximately seven years
later.
Assuming
the same account and portfolio data from above, investors had one
month, ONE MONTH, to celebrate returning to their previous account high
of $1,000,000 before the bottom dropped out again. This time, the
S&P 500 index dropped approximately 57% from its peak in October
2007 (a loss of $570,000) to its bottom in March 2009. This time the
market didn’t fully recover to its pre-crisis levels until March
2013.
Unless
you were one of the fortunate few who chose a different approach in
September or October of 2007 and moved to cash or used a strategy to
profit from the declining market, it took 13 years to break even. A
13-year drawdown is beyond painful – it is life-altering and nothing
short of a nightmare for a retiree.
As
a brief aside – if you are unsure what a drawdown is, as I have been
shocked to learn that many active investors do not understand, please
click this link to learn more. There are two types of drawdowns that you need to be aware of.
Fast forward to today, in the volatileStage 3 topping phasemarket
phase we are navigating, the peak we experienced in 2022 may not be
reached again for 3, 7, or 13+ years. Capital protection and asset
management are a must for investors for the next several years…unless
you like afore mentioned roller coasters.
During
that 13-year nightmare, there were some big rally days in the market,
and the financial industry had us believing this was a cause for hope,
if not celebration. In actuality, none of them mattered because they
all happened when the investments were already at a loss. In fact, the
only time missing big rally days makes you fall behind a little is
during a raging bull market when stock indexes are making new all-time
highs. Those are the real growth rallies.
Concluding Thoughts:
In
short, all these bear market rally days did, was offer a glimpse of
hope when there was nothing to support or sustain it. They served as a
rallying cry to ‘hold on, and things will get better’ and then fizzled
away to account for not much more than that. At the end of the day, did
the buy-and-hold strategy work? Sure, but it took roughly 4,700 days to
do so. If you are in retirement, that is a very long time to wait for
income and growth…and a very long time to live in fear, stress, and
anxiety.
Having
been an active trader and investor since 1997, I have lived, learned,
and profited through multiple bull and bear markets. I have survived
and thrived in global events because I trade and invest differently
from others. Through the use of technical analysis and an asset
hierarchy, I identify trends, follow prices, and manage positions and
risk. This is my first key to long-term success. I teach two strategies
in the Second Edition of my book,Technical Trading Mastery – 7 Steps To Win With Logic.
I think we still need to be careful with gold, any positive news in Europe could send gold for a tumble.
OEXTrader.com
April 23, 2023
Thought I would take a look at GLD with our MAJ indicator. There may be more room on the downside.
OEXTrader.com
April 16, 2023
Not a lot of change, just above the upper trendline. Only minor divergence on our RSI oscillator.
OEXTrader.com
April 9, 2023
Possible short term top, on our OEX chart.
OEXTrader.com
APPLYING TREND MOMENTUM AND PANIC BUYING & SELLING INDICATORS TO THE S&P 500 (SPY)
Reading Time:2minutes
Quite often, I get asked about two of the indicators I use in my pre-market report videos. One is proprietary, and one is not.
The
proprietary trend momentum indicator runs on the 30-minute chart of
regular trading hours only. For those of you who don’t know, that’ll be
the green, red, and orange bar chart on the left side of the video
screen. This indicator helps to filter out the noise of futures or
after-hours trading and allows me to more accurately gauge the
direction the market may go next. For example, if an overbought zone
(shaded red bars) appears, it can be a hint that the market is about to
change directions.
The panic selling and
panic buying indicators complement that of trend momentum. These two
indicators are the green and red line charts on the upper left side of
the video screen and can be added to your own charts. When the green
line chart is pushed above a three, this is an indication that traders
are spooked and have begun dumping their shares. Conversely, when the
red line chart rockets past three, then people are buying no matter
what the price is. Essentially I am able to see and track the emotional
sentiment of market participants and what is likely to happen next.
Here’s
your opportunity to get caught up on what is turning out to be a series
of valuable tidbits from the last mentoring session my team and I had
with our subscribers. To get caught up, click on any of the links below.
If
you want a morning video update to get your investing or trading day
started, complete with trend momentum and market sentiment analysis, ourBest Asset Now (BAN) subscriptioncould be just what you are looking for!
