US stock market could have hit the top. 3000 SnP 27400 Dow.
Knowing that we are close to the end of the cycle is fairly easy (thought it seems not that simple to "normal" people).
The part that is hard is timing the market, knowing where to precisely enter. Ray Dalio said that competing that way in the stock market was harder than competing in the Olympics.
For investors that are not a wall street firm of 500 mathematicians and economists, or very good like Jesse Livermore Stanley Druckenmiller Georges Soros etc ok maybe that's too restrictive. For investors that aren't in the top 9% or 10% or 15% or 1% (I have no idea but I know in day trading firms they see success rates of 5% so I want to say it's more than that since "normal" trading is "better" than day trading but in the retail world random ignorant people think they have a choice and there is 0 filter), the goal is to figure out where in the cycle we are, buy when there is blood in the street, and sell when "everything is good".
I will quote Ray Dalio on how to figure out how far we are in the economic (or debt) cycle as well as how the bear market will be:
- What is the Central Bank monetary policy? (Rates are low right now...Not much room left)
- How much debt has been used (FED bought 15 Trillion of stocks in 2008 to save the economy, the gov bailed out AIG, what else the federal debt is ridiculous, funds leverages are high obviously since low rates...)
- Look at the sentiment/euphoria (Experts KNOW we are near the top and there is no mainstream euphoria mania like 1929 but look at all the Robinbros buying everything with "future" in their story, look at CryptoCurrencies they are a reflection of the general sentiment ultra bullish on returns)
- Compare Bonds pricing and Stocks pricing (Bonds show the future)
In parenthesis these are my remarks/explanations.
He thinks central banks will get desperate and give money printed out of thin air to the population to spend :D.
Bonus things to look at:
- "Buffet indicator" (You can find one in my scripts, it compares indices to GDP through history)
- Price/Earnings ratio (which have been for a while at 1929 level only beaten but the Dot Com bubble)
- Another thing to look at from Ray Dalio: Are people extrapolating from the past ("Last time the bears said" go check Bitcoin...)
One rule from myself I want to add to this is that nothing is free. There is (gee this is so obvious) no magical easy way to tell in 5 minutes "Yep I should buy here" or "Ah time to sell" 0 effort 0 thinking... And people who even WANT to find a quick easy way to beat the market deserve to lose deserve to lose.
Looking at the Dow Chart we seem to often make higher highs in bear markets...:
Trying to time the market...
Right now on the big US indices we have a hammer candle on monthly charts, this could be the top, but I do not know enough to go short here...
I think to time the market you just have to take risks and often lose this is why it is important to have a high Reward to Risk once you start getting good at this.
And use TA to time it.
So as I said many times:
0- Preserve financial & mental capital bla bla bla.
1- Build the correct bias. With stock this is throught the Ray Dalio rules I mentionned.
2- Find high risk reward plays with TA or FA if it is available (I think for beginners using small money and focussing on following a system correctly and making the right decision and making a couple trades is more important than caring about high RR immediately but that said what got me interested and how I started was seing very high RR opportunities on currencies & crypto currencies)
No one predicts the future with precision (except with ponzi scheme Bitcoin but well you get 5 opportunities a year and frozen capital the rest of the time), but if you are right on a "macro" level all the time, and go for 10 reward to 1 risk entries, babysit the trade, have big wins 10% of the time and small or breakeven 40% of the time and only lose 50% of the time... You know.
As I said, we will have confirmation once it will be too late. Missed out on that short.
Well maybe it was wrong not to short. I just was not confident enough I can't tell if it was a right or wrong decision.
To be honest it was not really too late, an entry on that hammer monthly candle was pretty good, NOW thought it is too late.
I was not looking as I am focussing on currencies & commodities that provide me a great number of 1 day to 2 weeks trades, and am just looking at stocks once in a while (and same for Bitcoin now).
So do not count on me to warn when exactly to go in! :p
(In this idea)
Now all 3 possibilities are realistic and I think one of those will happen probably:
- We stay in the channel and continue making a distribution rising wedge
- We bounce and break above the channel then go up up up
- We go below the lower bounds and below 2018 low and weeeee down weeeeee go!
The part that is hard is timing the market, knowing where to precisely enter. Ray Dalio said that competing that way in the stock market was harder than competing in the Olympics.
For investors that are not a wall street firm of 500 mathematicians and economists, or very good like Jesse Livermore Stanley Druckenmiller Georges Soros etc ok maybe that's too restrictive. For investors that aren't in the top 9% or 10% or 15% or 1% (I have no idea but I know in day trading firms they see success rates of 5% so I want to say it's more than that since "normal" trading is "better" than day trading but in the retail world random ignorant people think they have a choice and there is 0 filter), the goal is to figure out where in the cycle we are, buy when there is blood in the street, and sell when "everything is good".
I will quote Ray Dalio on how to figure out how far we are in the economic (or debt) cycle as well as how the bear market will be:
- What is the Central Bank monetary policy? (Rates are low right now...Not much room left)
- How much debt has been used (FED bought 15 Trillion of stocks in 2008 to save the economy, the gov bailed out AIG, what else the federal debt is ridiculous, funds leverages are high obviously since low rates...)
- Look at the sentiment/euphoria (Experts KNOW we are near the top and there is no mainstream euphoria mania like 1929 but look at all the Robinbros buying everything with "future" in their story, look at CryptoCurrencies they are a reflection of the general sentiment ultra bullish on returns)
- Compare Bonds pricing and Stocks pricing (Bonds show the future)
In parenthesis these are my remarks/explanations.
He thinks central banks will get desperate and give money printed out of thin air to the population to spend :D.
Bonus things to look at:
- "Buffet indicator" (You can find one in my scripts, it compares indices to GDP through history)
- Price/Earnings ratio (which have been for a while at 1929 level only beaten but the Dot Com bubble)
- Another thing to look at from Ray Dalio: Are people extrapolating from the past ("Last time the bears said" go check Bitcoin...)
One rule from myself I want to add to this is that nothing is free. There is (gee this is so obvious) no magical easy way to tell in 5 minutes "Yep I should buy here" or "Ah time to sell" 0 effort 0 thinking... And people who even WANT to find a quick easy way to beat the market deserve to lose deserve to lose.
Looking at the Dow Chart we seem to often make higher highs in bear markets...:
Trying to time the market...
Right now on the big US indices we have a hammer candle on monthly charts, this could be the top, but I do not know enough to go short here...
I think to time the market you just have to take risks and often lose this is why it is important to have a high Reward to Risk once you start getting good at this.
And use TA to time it.
So as I said many times:
0- Preserve financial & mental capital bla bla bla.
1- Build the correct bias. With stock this is throught the Ray Dalio rules I mentionned.
2- Find high risk reward plays with TA or FA if it is available (I think for beginners using small money and focussing on following a system correctly and making the right decision and making a couple trades is more important than caring about high RR immediately but that said what got me interested and how I started was seing very high RR opportunities on currencies & crypto currencies)
No one predicts the future with precision (except with ponzi scheme Bitcoin but well you get 5 opportunities a year and frozen capital the rest of the time), but if you are right on a "macro" level all the time, and go for 10 reward to 1 risk entries, babysit the trade, have big wins 10% of the time and small or breakeven 40% of the time and only lose 50% of the time... You know.
As I said, we will have confirmation once it will be too late. Missed out on that short.
Well maybe it was wrong not to short. I just was not confident enough I can't tell if it was a right or wrong decision.
To be honest it was not really too late, an entry on that hammer monthly candle was pretty good, NOW thought it is too late.
I was not looking as I am focussing on currencies & commodities that provide me a great number of 1 day to 2 weeks trades, and am just looking at stocks once in a while (and same for Bitcoin now).
So do not count on me to warn when exactly to go in! :p
(In this idea)
Now all 3 possibilities are realistic and I think one of those will happen probably:
- We stay in the channel and continue making a distribution rising wedge
- We bounce and break above the channel then go up up up
- We go below the lower bounds and below 2018 low and weeeee down weeeeee go!
Comment:
The Akkadian Empire was the first civilization to get so big and radiate so much they were called an Empire.
Since then, hundreds, maybe thousands of empires (also called superpowers) have emerged and collapsed.
I am not sure what the average lifespan was.
Dozens of empires were the first in something.
The first multi continent empire.
The first empire with democracy.
The first industrial empire.
Etc.
The third Reich was supposed to last 1000 year. Died in like 5 years LOL.
USA are first in nothing. Ok they are the first to send a man to the moon but this is not a property of their empire but more of a stunt.
So why would the USA not fall?
The blind "believers" believe the US stock market will be in a bull trend forever "all you have to do is buy and hold it always go up Warren Buffet said so". They call being bearish "Fear Mongering / FUD", spreading conspiracy theories, and insanity even (I have been told to take my pills quite a few times).
But when you have a brain and know a tiny bit of history you can clearly see that NOT being bearish is the insanity here!
Since then, hundreds, maybe thousands of empires (also called superpowers) have emerged and collapsed.
I am not sure what the average lifespan was.
Dozens of empires were the first in something.
The first multi continent empire.
The first empire with democracy.
The first industrial empire.
Etc.
The third Reich was supposed to last 1000 year. Died in like 5 years LOL.
USA are first in nothing. Ok they are the first to send a man to the moon but this is not a property of their empire but more of a stunt.
So why would the USA not fall?
The blind "believers" believe the US stock market will be in a bull trend forever "all you have to do is buy and hold it always go up Warren Buffet said so". They call being bearish "Fear Mongering / FUD", spreading conspiracy theories, and insanity even (I have been told to take my pills quite a few times).
But when you have a brain and know a tiny bit of history you can clearly see that NOT being bearish is the insanity here!
Tech has grown too fast for society to adapt to it.
Donald Trump forces stocks to go up.
The rich get richer as a result.
The wealth gap grows even more.
The word "democrat socialism" gets thrown around (uh this is new).
Full populism with retarded declarations "it's white supremacy if you are less rich"
The "anti-NAZI" (kek) NAZI get in power. Oppression of white men goes exponential.
Civil War in the USA. Yay.
S&P 500 goes 3 digits. Possibly as low as 500 points. Dow 5k.
Socialism has failed over and over for centuries. It has not been successful once, but hey, idiots have memories of goldfish and do not care about boring history.
#ThisTimeItsDifferent
Socialism doesn't sound as bad if you put the word democrat in front of it.
It's like National Socialism right? Doesn't sound as bad, right?