The masters of deception AKA experts take delight in concocting all sorts of fables as to how the markets are destined to crash. They go on to state the markets will remain in a downtrend for years to come. Let’s stop right there, the only thing that has crashed is their ego, and the only downtrend insight is their dismal forecasting record.
From a Mass Psychology perspective, bear markets are nothing but buying opportunities as they will spawn the next bull market. When you hear these nutcases posing as experts stating that the financial world is going to collapse, ignore the noise and focus on the facts. In almost every instance, these chaps are only predicting their demise. History indicates that markets trend upwards for much longer periods then they trend downwards. Additionally had an investor purchased top rated companies when the masses were dumping their stock during the so-called crash phase, they would have made a fortune over the years. To be fair one does not jump in as soon as the masses start to sell or buy as soon as the masses turn bullish. One looks for extreme shifts in emotion; when the crowd is euphoric it’s best to take profits and sit on the sidelines; if you are aggressive, you can short the markets. When the panic readings soar to the stratosphere, and there is a talk that the outlook can only worsen then the prudent call of action is to start establishing positions in top-rated companies.
Every time the Markets sell off these lunatics posing as experts start raving about the next crash and a plethora of articles are frantically penned as the experts are desperately hoping that things will pan out differently. Is this not a clear example of insanity in action; regurgitating the same rubbish in the hopes that the outcome will suddenly change. One thing these guys are good at is writing fiction, and it makes you wonder why they don’t make a career out of that as they are pretty darn good at it; reality seems to elude them.
Since the inception of this bull market we have repeatedly stated that until the sentiment turns decidedly bullish and for an extended period, this bull market is unlikely to end. In Jan the bullish sentiment soared past the 60% for the 1st time in years. This could have marked the end of the bull, but the markets let out a massive dose of steam over a very short period and negative sentiment soared. Bullish sentiment has continued to trend downwards from its high of 60 in Jan 2018. Therefore, for now, a crash has to be ruled out, but the markets will continue trending in a wide range until they moved to an oversold state.
Market sentiment is far from bullish
The gauges below clearly indicate that the masses are far from bullish and one of the founding principles of mass psychology is that you never take a position against the masses unless sentiment readings hit the extreme zone.
The markets are still overbought so they are likely to trade in a wide range. Volatility will be a big issue; expect to see wide swings of 200-400 a day and possibly one to two 1000 points swings in the Dow before the Markets bottom. This action should continue until the markets move into the oversold ranges; after that, the market will be poised to trade higher. we would not be surprised if the market is trading at new highs by year end.