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Why 95% of Traders Fail

Stock Market Crash to New All Time High Dow 16,695 S&P1897

Stock-Markets / Stocks Bull Market May 13, 2014 - 10:25 AM GMT

By: Nadeem_Walayat

Stock-Markets

Major U.S. stock market indices continue to confound perma bear rhetoric that has seen virtually every minor correction of the past 5 YEARS as the start of a bear market or worse an always imminent crash that has succeeded in scaring most retail investors out of bull market for its duration. When the reality is that if a crash has been taking place than it has been to the UPSIDE as illustrated by the Dow in the face of this time the "'Top is In' mantra resolving to close up another 112 points at 16,695 marking its 3rd closing new all time high of the year whilst the S&P added 18.17 to close at a new high of 1896.65.


Most market commentators can only fumble and mumble to explain why as they throw unactionable guesses into the air such as hedge fund buying, or bargain hunting, or short covering, or earnings surprises (when there were no surprises) you know the usual garbage thrown up into the air to hope something catches readers interest.

As I have covered many times over the years, it is not of much value to explain why something has already happened because any news event could be used to explain a rise or a fall in market prices and usually the perma- fools (journalists) can be found explaining either a rise or fall in the stock market on the basis of the SAME data on differing days. This illustrates why most investors miss whole bull and bear markets, it is because they are paying attention to those that don't even trade! The smartly dressed idiots reading off autocue's written by journalists, managed by senior journalists none of whom have ever traded and if they had they FAILED because that's why they ended up where they are.

Similarly, highly vocal snake oil sales men can be touting their worthless insights in the mainstream news media, spending hours arranging and traveling too and from TV studios across the world, usually culminating in commentary that can be construed towards ANY eventual outcome i.e. that the stock market could rally but then again the stock market could also fall, afterwards they focus only on the aspects that turned out to be right despite the fact that such commentary was completely in actionable at the time and to all intents and purposes worthless, just as a means towards promoting worthless services to the gullible masses.

The bottom line is that most analysts are nothing more than salesmen, their primary objective is to entice you to buy a product or service, and therefore they have to follow the scenario's that are likely to generate the most revenue which is why the sales pitch is Crash this that or the other because FEAR SELLS ! Which is why politicians, intelligence agencies and market salesmen constantly play the fear card as I have written about several times over the years.

Whilst the delusional perma bears can only continue with their slave like mantra that the top is in and everyone should go short each time the Dow retreats a few points from its latest rally high as I have repeatedly warned to IGNORE as they are literally setting themselves and anyone who listens to them to be crucified!

03 Oct 2013 - U.S. Government Shutdown Great for Stocks Bull Market, Bears Will be Crucified Again

I keep being reminded of the movie SPARTICUS where the slaves are lined up at the end just like market commentators line up at the depths of market corrections to once more proclaim that they too are ALL Sparticus! Calling THE Top! However, we all know what happens at the end of the movie, as they all end up getting crucified, and we don't have to look far to see what happened following EACH end of the bull market final top call of just this year! Let alone a bull market that is now well into its fifth year.

The bottom line is this the US government shutdown is GREAT NEWS! because for bull markets to persist and continue they NEED BAD NEWS every few months, THEY NEED MOST PEOPLE TO BE SKEPTICAL, TOO AFRAID TO INVEST! And so it continues to be the case for the DURATION OF THIS BULL MARKET, where over 90%, NINTEY PERCENT OF Market commentators have been WRONG and continue to be WRONG, Everyone who has just proclaimed its END IS WRONG and Will BE CRUCIFIED, just as they have been crucified at every market turn for the past FIVE YEARS !

YOU WANT TO LOVE MARKETS THAT ARE HATED!

YOU WANT TO BE AFRAID OF MARKETS THAT ARE LOVED!

UNDERSTAND THIS - THIS stocks stealth bull market is one of the GREATEST bull markets in HISTORY!

Off course a real life crucifixion would mean the fools would would ceased and desisted in their demented ramblings, but that is one of the negatives of the passing of the Pagan Roman Empire. Instead the so called market commentators march on as if nothing happened despite spouting more garbage because clearly they NEVER put their own money on the line, which is the real secret for arriving at the most probable outcome. This is why virtually every time I write an article on the stocks bull market I get so many comments and reasons to explain why I this time I am wrong and it has ended.

Instead I have to reiterate what I have voiced for the duration of the stocks stealth bull market in over 200 articles (Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470 ), my strategy has been very, very simple, no black box voodoo to sell garbage to the unsuspecting masses but simply this - " The Greater the deviation from the stock market high then the Greater the Buying Opportunity Presented". And, you can't get any simpler than that !

So no black box top secret program, no need to subscribe to a flip flopping newsletter commentary service that is most bearish at market bottoms and most bullish just before markets top out and then suffers amnesia as to what was actually written which ultimately means converging towards writing weak conclusions that could imply any eventuality.

Whilst the strategy is simply to buy deviations from the highs, the mechanisms for market positions is money management, something that is rarely if ever mentioned because that is not what the punters want to hear they want to hear about the future, they don't want to hear about the actual mechanisms for making profits which is rooted in two elements -

a. Money management

b. Real-Time

Instead, having been successfully brainwashed since birth punters tend to focus on the future by referring to the past. This is our societal programming, it is not surprising why for such conditioning as it is the nature of the world we experience as a time line from birth to death, therefore we are easily conditioned to refer to the past be it economic, market history, political and as most visibly - religious history as per doctrine contained within the religious scripts towards what needs to be done to gain the ultimate bright future, even if that outcome is said to only materialise AFTER one DIES! i.e. in the perfect Afterlife.

The inexorable truth where the stock market is concerned has remained constant for the DURATION of what I termed as a STEALTH bull market for at least the first 4 years that on breaking to NEW All time highs has to be recognised a bull market proper. That truth is one of an exponential inflation mega-trend that assets such as stocks and housing are leveraged to as I have covered in over 1000 articles and in four ebook's to date in the inflation mega-trend series (FREE DOWNLOAD NOW) with the latest ebook focused on the housing markets into the end of 2018 due for imminent release (ETA 16th May 2014).

For a further dose of stock market reality over rhetoric of the perma crash is always coming here is an timely excerpt from my article of last November in response to warnings of an imminent 40-55% CRASH now over 6 months on!

11 Nov 2013 - Stock Market Forecast 2014 Crash or Rally? Drone Wars and the Nuclear Apocalypse

Stock Market Crash?

Whilst the press is populated with doom commentary such as that of John P Hussman highly regurgitated recent article that warns of a 40-55% stock market crash! Can you believe that forecasting a 40-55% CRASH! When a crash is a panic event, that cannot be forecast ! ONLY TRADED! That says it ALL!

John P. Hussman - In any event, I continue to believe that it is plausible to expect the S&P 500 to lose 40-55% of its value over the completion of the present cycle, and suspect that whatever further gains the market enjoys from this point will be surrendered in the first few complacent weeks following the market’s peak. That’s how it works. If all of this seems like hyperbole, please recall my similar concern at the 2007 peak (see Fair Value – 40% Off), and the negative 10-year return projections – even on best-case assumptions – that we correctly estimated for the S&P 500 in 2000. These numbers relate to the striking gap between present valuation levels and normal historical precedent, not to personal opinion.

And here's what Hussman wrote about the stock market a year ago:

Hussman: Bear Market Looms Despite Flirting With Record

The stock market’s recent advance to almost record highs isn’t a sign of good things to come, says John Hussman, president of Hussman Investment Trust. “[T]he present is a terrible time to accept a significant amount of market risk,” he says in his weekly market commentary.

While it’s impossible to predict where the market is headed over the next week or month, “there is strong precedent for extended market losses and bear markets following overvalued, overbought, overbullish, rising-yield syndromes,” Hussman says.

And the year before:

John Hussman Isn't Buying The Rebound

“At present, the S&P 500 is again just 10 per cent below the high it set before the recent market downturn began,” he said. “In my view, the likelihood is very thin that the economy will avoid a recession, that Greece will avoid default, or that Europe will deal seamlessly with the financial strains of a banking system that is more than twice as leveraged..."

His very latest article is titled A Textbook Pre-Crash Bubble.

A log periodic pattern is essentially one where troughs occur at increasingly frequent and increasingly shallow intervals. As Sornette has demonstrated across numerous bubbles over history in a broad variety of asset classes, adjacent troughs (say T1, T2, T3, etc) are often related to the crash date (the “finite-time singularity” Tc) by a constant ratio: (Tc-T1)/(Tc-T2) = (Tc-T2)/(Tc-T3) and so forth, with the result that successive troughs come closer and closer in time until the final blowoff occurs.

Frankly, I thought that this pattern was nearly exhausted in April or May of this year. But here we are. What’s important here is that the only way to extend that finite-time singularity is for the advance to become even more vertical and for periodic fluctuations to become even more closely spaced. That’s exactly what has happened, and the fidelity to the log-periodic pattern is almost creepy. At this point, the only way to extend the singularity beyond the present date is to envision a nearly vertical pre-crash blowoff.

So Yes, John Hussman is a 'I am Sparticus', I call it perma-tripe. A closer look at his website explains why because what he is effectively SELLING is BEAR MARKET PROTECTION! (investment funds). So as I have pointed out many times over the years that almost 95% of what you read is either a SALES PITCH or a sales pitch that is being regurgitated by clueless journalists and the BLOGOSFEAR !

Sales pitches are the order of the day for instance Religions give their sales pitch that you must give up freewill in this life and follow doctrine to gain entrance AFTER you die to an afterlife. Science gives its sales pitches for hundreds of billions in academic funding, for instance that 95% of the Universe is DARK, invisible. When it is common sense that, that is utter nonsense for 95% of the Universe to be made of something that cannot be measured such as Dark Energy or Dark Matter so as to fit in with Einstein's theory of general relatively. It's obvious ! Einstein is WRONG!

Einstein was wrong in terms of the way Gravity behaves across the Universe across its HISTORY. What Einstein's theory predicts is where the Universe is today and where it must have been at the beginning so as to arrive at our current destination. But the problem is, as is with the case for stock market trends, that trends are NOT SMOOTH LINES. Therefore neither is the history of gravity in the evolution of the universe. Gravity at the time of the big bang and Gravity today are NOT the same. If you subscribe to this then you no longer have a need for DARK energy and matter to explain how the Universe expanded from the big bang to its current state of acceleration.

So the consensus view of dark energy and matter is wrong because in reality they do not exist, instead it is our understanding of gravity and its history which is wrong, or rather incomplete. This is what commonsense suggests..... more in a future article.

Whilst my last in-depth analysis of the Dow which I wrote at the heights of the then imminent bear market about to begin mantra of early February 2014 concluded in the following trend expectation:

3rd Feb 2014 - Stocks Bull Market Over? Are the Bears About to Break...even?

The current stock market correction looks set to attempt to revisit 15,000. How close it gets to 15,000 I can't tell, perhaps half way, just that the correction is not done to the downside. Following which the price chart implies that the Dow will enter an upwardly sloping trading range that would target a NEW all time high. However given the nature of trading ranges it is difficult to say how many swings it would take for such an outcome to occur, i.e. the last such trading range comprised 7 swings before breaking higher. This one could be quite brief and just comprise 2 swings as indicated by the chart, which could imply a New Dow high by early April, though that does not mean that the Dow would be able to hold the high as it could remain in the upward sloping range for some time which implies Sell in May and Go away as probable.

So to answer the question - Is the stocks bull market over ?

NO ! No sign whatsoever that this (what people decades from now will look back on as being the greatest bull market in history) bull market is anywhere near being over!

The subsequent price action closely matched my trend expectations as the Dow bottomed at around 15,250, and then began its volatile climb to set a new all time intra-day high on 4th of April 2014 at 16,631, just failing to break its closing high of 16,577 of 31st December 2013 by 5 points (16,573)that had remained pending until the 30th of April.

Ensure you remained subscribed to my always free newsletter for my next in-depth stock market analysis which will follow the completion of my latest ebook in the Inflation Mega-trend series on the US and UK Housing Markets (ETA 16th May 2014) which goes beyond housing market analysis and detailed trend forecasts by covering many home buying and selling topics such as -

  • Thorough step by step guides of how to buy and sell homes, from locating properties, to making offers to dealing with estate agents and much more.
  • What to do after you move into your new home.
  • Analysis of buying vs renting
  • 15 detailed guides on how to increase the value of your home
  • Costly home improvements to avoid.
  • Managing your mortgage debt
  • Maintenance that can save you a lot of money long-term
  • Regional house prices analysis
  • Surveying properties - what to look for
  • and even how to get on with your new neighbours.

Source and Comments:http://www.marketoracle.co.uk/Article45574.html

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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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