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sdholloway56
Senior Advisor

somebody's making huge bank

When they rang the bell a couple weeks ago for the end of the Nasdaq's huge 20% terminal run following the election.

As the liquidation- actually more rotation for risk off- intensifies the same pattern emerges every day. 

Sell the Nasdaq when the 30 min RSI goes above 70. When it gets below 30, buy the Dow. A function of how the megabigs are rotating their portfolios.

$Ts went off to hide in the big techs during risk on. There's too much money involved to manage the rotation without  downward pressure, but the rotation suggests it is just a needed correction, not a crash. Wild guess says 10% in Dow, 20% in Naz.

Disclaimer- once you figure out a pattern it may be near the end.

 

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4 Replies
BA Deere
Honored Advisor

Re: somebody's making huge bank

Everybody knows "the stock market always comes back" ..tech bubble, housing bubble, Dessert Storm, 9/11, Covid...it drops 20% and 8 months later is making new highs, all ancient history.   It seems like a "crisis" actually gives the Fed an excuse to surreptitiously pump money into the markets above and beyond  the Suzy Orman faithful "stay the course with your 401K" crowd.

So what entertainment do they have planned for us next? another war? another pandemic? invasion from outer space?   The fed will come to the rescue and so long as the countries around the world that are worse of than us, still can borrow money to buy US T-bills it`s all good...shoot we`ll send `em foreign aid to buy US treasuries if we have to.

Can Car Tires Pop From Over Inflation?

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Packard27
Senior Contributor

Re: Everybody knows "the stock market always comes back"...

Yes, it is true that the stock market has “always come back” in the past. The two questions, however, are, 1) Is past experience a guarantee for future performance and 2) Just how long can a market’s down cycle last?

From October 1929 to July 1932 the DOW lost (swallow hard here) a whopping 88% of its total value. Moreover, and oftentimes forgotten, it would take another 21 years to include enduring the Great Depression, WW II, and the Korean War before the DOW would regain its original 1929 highs. From peak to trough and back to peak again turned out to be a nearly 24 year grind for investors. Ahhhh, for the good old days....ehhh?

Here is one last happy thought. What is cautionary about historical examples is that they only tell us how bad things have been in the past. There is nothing written in stone, in the US Constitution, or in the laws of physics that says that things as they exist today cannot get considerably worse than anything recorded in the history we are reading. Assuredly, they can.

[Cliff’s Notes for Investors: Think long term (+15-20 years), diversify your assets, avoid taking on too much leverage, pay attention to your own expense ratios, practice both thrift & industry in your personal life, and lastly, believe in America.]

Otherwise, good luck, health and the continued pursuit of happiness to all.

ANF

 

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BA Deere
Honored Advisor

Re: Everybody knows "the stock market always comes back"...

Hey Packard, people these days count on the stock market for their retirement and they have much less patience than in the past.  Up until the 80`s it was only the country club old money crowd that invested in stocks.   Now it`s even the shoe shine boy that would`ve shined Rockefeller`s shoes back in `29 has a 401K.   The public will vote out politicians if the market is down more than a few months, the Federal Reserve is in fear of riots and will cut rates, QE spend anything to keep the man behind the curtain. 

The public puts up with a lot if the ol` Dow is making records every week.   Grandpa`s common sense would say "invest in farmland, they ain`t makin` anymore of it"  Heck of it is the damned government will shift spending down to the county level and we`ll all have high land taxes just like Nebraska ..all to have revenue to shovel money into propping up the stock market.

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Packard27
Senior Contributor

Re: Everybody knows "the stock market always comes back"...

Amen Brother BA!

With the times we are living in, I find myself less trying to get rich these days as much as I am desperately hoping to avoid waking up to discover myself poor. There's a lovely thought.

I don't wish to sound too negative here, but when this $30 trillion party finally ends, I fear the national hangover suffered by all of us (in one way or another) is going to be a doozy. Covid pandemics, shut down local economies, and trade imbalances notwithstanding, we ain't seen nothing yet.

Tally ho,

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