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Trading Lessons

Stocks Bear Market Catastrophe as Stocks Flash Crash to New All Time Highs

Stock-Markets / Stock Markets 2014 Nov 09, 2014 - 09:59 PM GMT

By: Nadeem_Walayat

Stock-Markets

The stock market has once more confounded all expectations by resolving to NEW ALL TIME HIGHS, this at a time when most market commentators had convinced themselves for much of October that the Top was in and that a new bear market had begun that in fact many proclaimed was on the verge of a crash given the accelerating rate of decent, and October was not extraordinary for such has been the case for the WHOLE of 2014! for EVERY MONTH of this year was meant to mark and END to the stocks bull market! Where the greater the deviation from its high the more vocal the doom calls became.


My last look at the stock market warned that new all time's were imminent.

31 Oct 2014 - Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start

Clearly the stock market is showing relative strength and a DOW NEW ALL TIME HIGH Beckons.

Though off course saying that the Dow is going to make new all time high at Dow 17,195 is a lot easier to do than for instance back in the midst of Octobers doom and gloom when stocks were lurching to the downside each day, which proved a much more difficult exercise to arrive at a probable trend for the Dow that resolved towards its high before year end, at a time when the rate of decent was still accelerating let alone showing any signs for hitting bottom. However my last in depth analysis of a month ago concluded in the following trend expectation, that made it clear that I expected the stock market to once more resolve towards its all time high before year end.

12 Oct 2014 - Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015

Stock Market Forecast Conclusion

My final conclusion is for the Dow to continue its volatile trend lower into Mid November towards 15,350 , probably bottoming out around 15,500. To be followed by a rally to 17,100 by the end of this year, following which I expect a weak January with Dow probably ending the month below 16,500 having traded down to 16,350.

I don 't have to remind readers that virtually every correction of the duration of this 5.5 year stocks bull market has been accompanied with much hyper doom and gloom of why this time the stock market would with near absolute certainty collapse into a new bear market. Instead as we have once more witnessed this past few weeks the exact opposite ALWAYS happens, ALWAYS! Never once has a correction FAILED to resolve to a NEW all time high for the duration of this stocks bull market!

THAT is telling you something !

It is telling you as I have voiced countless times for the duration of this stocks bull market and as iterated in several hundred articles and 2 stocks stealth bull market ebook's (FREE DOWNLOAD) that THIS IS ONE OF THE GREATEST BULL MARKETS IN HISTORY! And in terms of the strategy for investing has remained very, very simple, not necessary to buy are subscribe to anything to profit from, but just a simple one line strategy that has been in force since at least April 2009 -

" The Greater the deviation from the stock market high then the Greater the Buying Opportunity Presented".

The most foolish thing that market commentators / participants can do is to go juncture hunting, something that they could literally spend doing for DECADES to come as 5.5 years turns into 11 years!

But what if the stock market actually does top tomorrow, or the day after?

The thought processes of most investors and traders is WRONG! The mass media, including most of the trading and investing books out there have conditioned most to THINK the WRONG way in terms of investing and that is for a reason and that reason is SALES! For salesmen to sell need to create a market for products, and over time, decades that market has become so convincing that 99% can only perceive investing and trading in such a way which is why NOW 99% LOSE trading and probably 80% investing up from about 90% / 70% a couple of decades ago.

For the answer why I refer you to my last ebook in the stocks stealth bull market series of Feb 2013 (FREE DOWNLOAD) as excerpted below -

The Real Secrets of Successful Trading

1. That you don't need to know ANY Technical Analysis to Trade

2. That you don't need to read ANY Trading Book to Learn to Trade. Do not invest yourself in Trading theory, for KNOWLEDGE is not the goal of trading! It does not matter if you ever heard of Gann or Elliott that will only seek to confuse and corrupt how you think and act. The only thing that matters is that you are able to grow your trading account!

3. To focus on trading Only ONE market.

4. To learn to imprint the price action into your mind through concentrated practice, anything that gets in the way of this process will NOT help you trade i.e. the hundreds of technical indicators because you are supposed to be trading the PRICE, and NOT the indicator! So when the indicator says one thing and the Price says something different then you will be CONFUSED, so forget ALL trading indicators and focus on just the Price.

5. The Holy Grail of Trading is YOU. Not any theory or tool or trading service - But How YOU REACT to Price Movements in REAL TIME.

6. Money Management is a Critical Real Secret to Successful Trading - Using Stops, Limits and Moving them in your FAVOUR as prices move in real-time. Your sole objective is to bank profits and let losses be stopped out short. If you have any doubts about a trade then you EXIT. It is not rocket science it is trading with determination of Gain vs Loss, Plus vs Minus, nothing more!

Market Forecasts

At about this point you are probably asking what about the forecasts?

Forecasting plays little role in trading, a shocker perhaps? But the reality is that one needs to concentrate on the current price and react to it, therefore one needs to stop second guessing the market by telling it what it should be doing which is what a forecast effectively is.

However, it is not as black and white to say that one does not forecast when when reacts to price movements in real time. For every trade entered into is on the basis of a positive outcome i.e. you are forecasting that your trade will generate a potential profit (limit) against a potential risk (stop). So in reality ALL trades are entered into on the basis of a forecast, its just that the forecast is not on the basis of analysis as positions have room to breath as stops and limits are adjusted or positions liquidated on the basis of doubt in response to subsequent price action.

For more on the real secrets for successful trading see the Stocks Stealth bull Market ebook (FREE DOWNLOAD)

Ensure you are subscribed to my always FREE newsletter for ongoing in-depth analysis and detailed trend forecasts. My next analysis should be on Gold.

The bottom line is this stocks bull market will only end when the perma bears on mass turn bullish! Therefore corrections such as Octobers are great for it continues to give the bears plenty of rope to hang themselves with.

Source and Comments: http://www.marketoracle.co.uk/Article48127.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2014 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

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 five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The 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.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

biju.joseph
14 Nov 14, 01:46
not seeing a stockmarket dip

Nadeem,

I see that in yourcast, you are anticipating a dip in January 2015. But when I read calculatedrisk blog(which has an excellent record like you), they are not seeing any recession in 2015. So is a big dip in Jan 2015 still possible ?

Regards


Nadeem_Walayat
16 Nov 14, 17:38
Ebola

Hi Biju

My expectations where that Ebola would break out of africa and start impacting on western economic activity by about Mid January.

At present the disease is still not being contained and continues to grow exponentially. Remember that whilst western healthcare is mostly robust, however countries such as India and China are very, very weak.

Best

NW


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