If you haven't studied bubbles do yourself a favor and spend some time looking into it. I expect a market rally before or right after the election (though one may never come). But if you look at monthly charts across sectors and key equities it should be clear to you that we are in a bubble and that bubble is starting to pop. It's a normal part of the market cycle nothing to be scared of. A good way to gauge is to look at long term trend-line supports and see where we are in relation to that trend support (1 year, 2 year, 5 year support lines). This is just a reminder to please take the emotions out of investing and make decisions based on your time horizon. Personally...I don't like the time in the market beats timing the market meme. I think a smarter approach is to reduce allocations in equities that are very clearly popping...increasing cash allocations...and then taking that cash and DCA'ing it back into the market (over a 6-12 month period) after or during a correction. (not financial advice).
I agree with Howard Marks that it's not technically a bubble, but we are certainly nearing the top of a short term debt cycle (last decade). He just released Mastering the Market Cycle, which I honestly can't recommend, but Ray Dalio released Big Debt Crises around the same time in Septemeber and it is the most comprehensive book on cycles I've ever read. If I can get the timing right, I'll be doing a big, leveraged short position in the next few months. For now, I'm cash, short term trades, and short term bonds.
Oh and more evidence of the bull trap if you're a chartist, S&P broke out above it's channel of the last decade this past year and is now sitting on the upper channel. A quick rally after the election to complete the pattern then a drop would be textbook.
Just DCA through it all and then ramp up the volume when panic selling sets in. We’re just back to late 2017 levels in the indexes. We have a ways to go before panic selling starts. Probably won’t happen until Job losses and layoffs begin to pop.
Post your puts or gtfo
I’m impressed dude. Hope it works out for you.
Thanks. I will try and circle back to this post in 6 months and post results (win or lose).
Sell robo positions now or try to ride the last gasp and sell at the top?
Diversify. Markets are deflating around the world. Emerging led / is leading the charge. ‘No safe haven’ so I’m in 💵, treasury bond ETFs and am slowly dipping into 🇨🇳 equities via ETFs that have yields of 4%+. Seeking quality dividend US stocks but turning up bupkis on my screeners. Having patience on either end is hard.
Which equities qualify in that range and of good quality ?
how do buy treasury bonds? i only use robinhood for trading. what platform do you guys use?
Here's a long term chart that's indicating a significant downdraft on the horizon. Rising wedges tend to fall...bearish divergences support that theory.
Great divergence example. I would sum this up as ‘do NOT buy the dip!!’
Thanks and yes I agree. The BTD mentality has worked extremely well up until now.
This NDX chart is a month old but I made a very rough edit to it to add October. We're starting to crack major long term trend lines in NDX, IXIC, SPX, RUT, and others...I expect our markets to start trading in sync with global markets (many of which have entered correction and crash territory for 2018) at some point.
And one more...again these are mostly monthly macro charts so doesn't mean a crash is coming tomorrow or even next year necessarily. But they are indicative of the end of another cycle in my opinion.
We are witnessing the unwinding of the ‘fully invested bear’ driven by FOMO, realizing valuations are sky high but still not keeping any cash on the sidelines. https://www.advisorperspectives.com/commentaries/2018/02/13/the-advent-of-a-cynical-bubble
Thank you for sharing that. 100% agree.
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Nice chart but NOBODY knows if this is in bull trap or not. The only truth in this stock market is that stocks were overpriced, we all knew it, at least in the back of our minds. You knew it. I knew it. When we put in money 2-3 years ago, we were just riding the momentum. We knew it would end. We just don't know if it's the drop last week, or today or is there more coming next week. Something that rises by 40% in a year without fundamentals supporting it is bound to drop. It happens with stocks, with Bitcoin, with dot coms, with mortgages, with steroids Nobody can abolish downturns.
100% agree. I think balance of probability leans heavily towards a continued correction but we could get another post election stock buyback tax cut rally. My money is on a deep correction into 2019 possibly 2020. Just trying to wake up complacent peeps that may have only known a stock market that goes straight up...that hey it's not always like that. :)
Not sure if peaks and troughs will be shallower this time, with a slow taper-down instead of falling knives.