Market correction this year - ....observations.

themickey

themickey

Below is a 20 year chart of Dow Jones Industrial, monthly bars, log scale %.
Using Dow just as a general default, nothing special why I chose, just that it's ok as a general all round mkt bellwether.

There's a saying, "go away in May....."

What you will observe if you look closely (because the bars are tiny) is the following:

1 Each vertical bar is 12 months duration beginning January (as per normal)
2 After the mkt has a weak year, probabilities are the following year is strong(er)
3 After a weak year probabilities of the following year having low volatility.

4 After the mkt has a strong year, probabilities are the following....
(a) The mkt will weaken the following year with increased volatility
(b) The month of May is not so much a problem as October.
(c) October the most volatile month.
(d) Two strong years in a row is about all the mkt can handle.

5 Each year after October normally a rally (Santa rally) around Nov-Dec-Jan.

Conclusion: The previous 12 months have been super strong, probabilities are we'll go weaker here on out with SHTF approx October, if not sooner.
download-1.png

Note: Some may reply 20 years is not enough sample to reach a conclusion.
Reply: Too long a lookback presents other problems, ie mkts continue to morph as new technology changes the landscape.

This is not a trading recommendation, just a personal observation / discussion topic.
 
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Oct sounds about right. I was thinking September, right after all the kids go back to school. Watch mortgage rates and lifting of covid restrictions, and for the current cheap money, free money printing press economy to get pulled back. Could even come in August, but if not by Sept then yeah Oct is very likely.

Look how steep the chart is right now. It's not sustainable and it has been artificially propped up since last June. We were overdue for a crash and the pandemic should have triggered it but the market was propped up with free money that nobody could spend, pumped into stonks by new traders and investors. Oil plummeted, keeping struggling industries (except the oil industry LOL) operating. Interest rates already low, went lower. People and the Fed and govt kept things going when it should have been 1929 all over again. But that 1929 feeling is still there, optimism on the street is off the chain, P/E ratios are getting crazy, noobs are bringing insane money to the table, and enough people are jumpy about it all that when things turn down, the financial toilet will flush and the bears will not even be able to keep up with it. I don't think it will be just a "correction". Like every crash, it will also be an opportunity for those ready to take advantage of it without just trying to short everything they can get their hands on.
 
Finding the top is always tricky, my experience bottoms easier to determine.
Atm, mkt tad nervous but I'm not although have lightened up and only buying if there is a very compelling reason - already beaten down. Gold would be an example or very good quality good earnings, good margins stocks.

Tops can generally do two things, toll over slowly or sudden collapse with little warning.
My guess, slow rollover atm, then a tipping point where there could be a gawd almighty plunge where rats jump holis bolis. That would be approx Oct approx SHTF time.
 
Haha, you wish. FED will keep printing the money forever and we are all going to the moon, you boomer. This is the new era, the exponential era! UPONLY!

It just takes such a long time, for everyone to reach maximum complacency, the last disbeliever to hop on and the stupid bears to start doubting their life choices. Then market will take it all away very quickly. Just stay patient and hit when the time is right.

My take. I view this as a generational shakeout. On a long term bears never win. Quick and violently, they feast. The good always wins in the end.
upload_2021-5-2_10-21-45.png


The shittiest of them lowcaps pump towards the end of the cycle though and give the best gains so by being bearish you can fuck yourself badly.
 
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orbit23 said:
Haha, you wish. FED will keep printing the money forever and we are all going to the moon, you boomer. This is the new era, the exponential era! UPONLY!

It just takes such a long time, for everyone to reach maximum complacency, the last disbeliever to hop on and the stupid bears to start doubting their life choices. Then market will take it all away very quickly. Just stay patient and hit when the time is right.

My take. I view this as a generational shakeout. On a long term bears never win. Quick and violently, they feast. The good always wins in the end.
View attachment 258054

The shittiest of them lowcaps pump towards the end of the cycle though and give the best gains so by being bearish you can fuck yourself badly.
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Hey, I like the suckers bounce you've drawn, prolly going to exactly do that. :)
Every tom dick and mary will buy the dip and get double shafted, I like it. :)
upload_2021-5-2_10-21-45.png
 
"The sky is falling ... The sky is falling ..." ( Chicken Little ).

Permabears are the most delusional people in the trading world. Always dreaming of getting rich off of generational market crashes. Calling for them almost every year. Always claiming market sentiment is far more bullish then it is ( look at this site; it's all top calls and attempts to short US indexes ). Making fanciful claims about market valuations and never forget Japan.

I don't know what the point is. Remember, poster "Schizo" guaranteed we'd never see 3390 on the SPX in our lifetime. "S2007S" said we'd crash 40-60% when the SPX was mid 1900s. "Deadbroke" claimed we'd go to 400 long before we ever touched 1530 again. "GrandSuperCycle" guaranteed we'd have a crash in 2012 or 2013 that would exceed anything that happened in 2008/2009.

Common ground is they all believed deeply in their theories, looked for any piece of "evidence" to support it, and were thoroughly unaccountable for their calls when they went down in flames. No doubt they lost considerable money chasing these ideas.

It seems religious in nature at times.
 
There's a fine line between success and failure.

Nine_Ender said:
"The sky is falling ... The sky is falling ..." ( Chicken Little ).....
Permabears are the most delusional people in the trading world. Always dreaming of getting rich off of generational market crashes. Calling for them almost every year..
More...

orbit23 said:
......It just takes such a long time, for everyone to reach maximum complacency, the last disbeliever to hop on and the stupid bears to start doubting their life choices. Then market will take it all away very quickly. Just stay patient and hit when the time is right.....
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themickey said:
.....Every tom dick and mary will buy the dip and get double shafted, I like it. :)....
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Nine_Ender said:
....Permabears are the most delusional people in the trading world.....
More...
Working on probabilities, once per 12 months price will come down onto MA200, DOWI.
Looking at chart below, approx Oct this year price due to hit MA200.
On current speed, that's about 4000 point drop to be on the average.
Previous correction was ~ 11,000 points.
download.png
 
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