Most pundits like to predict the past. There is good reason for that, having to predict the future is extremely hard if you want to be right more than 50% of the time.
Dow 15,000 was something I wrote about here in Jan 2015:
I recall this was a pretty brave call back then.
An example of predicting the past is calling a fall, ‘a bear market,’ after the market has fallen 20%. Calling a bear market when the market has only just begun is what we need. Calling a market a ‘bear market’ once the fall has taken place is stupid as well as dishonest. I make all my money buying this silly kind of ‘bear market.’ A 20% fall is normally a bottom of sorts in an index. Whats more what do you call a market thats going to fall 10% in the next extended period?
A ‘bear market’ means a market that has/is/is going to fall over a particular period. A Bull or bear market are not only directs but also styles.
Let me define a bull and bear market with two hand drawn charts.
The difference is behavior as well as direction. The following chart discounts direction, so you can see for example, when a market is a bear, even if today’s action is way up.
A Bear market is when the general tendency is down and the market drifts and rallies sharply to again drift. A Bull is the opposite.
The current Bear market process started in May-time.
So what next?
Firstly the market has repriced. That is where we are now. The only thing the market strictly cant do is now go right to left, but there are 3 likely out come, two of which are in view on the above chart, the V or thew W bottom.
There is no magic to that, A V or a W bottom are the two most simplest geometrical form to a slump and recovery.
V recoveries are much rarer than W recoveries. As such you could certainly expect another leg down below 16000.
Then there is the third high probability out come.
This is the half way down possibility, which would constitute a crash. This would need somekind of catalyst and this would likely come from China.
I think we are in a bear market and we will sit there until we get some kind of crash, but the market doesnbt care what I think which is why you have to keep watching.
I’m watching China.
I’m watching the post correction action we are in right now
I’m watching the Dollar, Euro, Yen and Pound to try and define the paths of QE and post US QE money flow, which is what is driving the market..
I don’t think we will get a V (20%) recovery, a W (40%) is totally possible because central banks can simply put a fix in, if they want to, and a crash (40%) can happen because the fragile state of the market as shown by its increasing volatility.
For a bear this represents two bites of the Apple, leaving the Bull in a most uncomfortable position.
If you end up reading this during a crash, remember let it run its course, then buy a couple of weeks after the headlines talk about blood on Wall Street. Then while the clueless talk about the new ‘bear market’ that strated after a 20%+ fall, you can be buying.