Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Most Important Chart To Explain Why Stock Market Bears Lose Money

Stock-Markets / Stock Markets 2018 Sep 07, 2018 - 08:11 AM GMT

By: Avi_Gilburt


I have spoken about this many times in the past, but the fact is that very few understand our financial markets. While no one is perfect when it comes to being able to identify turning points in the market, I think we all know that there has been a significant increase in that lack of perfection when it comes to the US stock market over the last three years.

You see, many focus on the wrong factors when making decisions about the stock market. While events such as Brexit, Frexit, Grexit, rise in interest rates, cessation of QE, terrorist attacks, Crimea, Trump, Syrian missile attack, North Korea, record hurricane damage in Houston, Florida, and Puerto Rico, quantitative tightening, trade wars, and many more have scared investors into believing the bull market will come to an end, none of these events have even put a dent in this bull market as it has rallied 50% during this period.

At the end of the day, markets are not about events. Markets are purely about mass psychology. When the market runs out of buyers because the great majority is bullish, then we hit a major top. And when the market runs out of sellers because the great majority is bearish, then we hit a major bottom. There's not much more you really need to understand about the market than that. The more important question is how to gauge that sentiment so you can align your purchasing and selling with those major turning points.

But first you need to understand why you may have been too bearish to enjoy the profits which have been served on a silver platter during the last several years. First, you probably read too many different perspectives, believing that the more information you have then the better decision you will make. Well, how has that helped you if you have been bearish these last three years? Moreover, most people seek some form of confirmation bias, so they pay more attention to bearish articles as compared to bullishly-inclined articles.

In fact, look at what has been offered during the last three years:

Now, to be fair, I think the creator of the chart included someone quite unfairly – Tom DeMark. Personally, I think his work is exceptional, and is not at all based upon the same factors as the others on this chart. Again, while one cannot always be right when it comes to the stock market, I think Tom is better than most, and was unfairly included in this chart. But, I digress.

Next, you have to understand how human beings process bearish perspectives relative to bullish perspectives. I have written about this several times in the past, and you can choose to refresh your recollection with this article here.

But, before you decide to ignore your bearish tendencies completely, I think you will need to hold off for the time being. Rather, I think you will likely need to get in touch with those bearish tendencies in the coming months. You see, when you look at our long-term perspective on this market, I think we are finally approaching a 20%-30% correction around the corner. While my ideal target for the S&P 500 has been the 3225SPX region for years, I also have noted that we may see an ending diagonal complete later this year in the 3011 region, which would bring about that 20%-30% correction sooner rather than later.

Moreover, if you think you “feel” bearish now, can you imagine what you and other investors will feel like when the market is back down to the 2400-2500SPX region? How about if we get down to the 2000-2100SPX region? Do you really think you will be able to fight those bearish tendencies, especially when it will feel like the financial market is crashing all over again?

Well, I'm giving you advance notice that this is likely what you will be dealing with when I begin to turn majorly bullish again around 2020, as I will likely expect that the stock market can even double from the point we complete the upcoming 20%-30% correction. So, you will have time to work on your ability to fight your natural tendencies in order to align yourself with the money-making side of the market. But I suggest you begin to develop the tools necessary to manage your emotions so you can align your portfolio with the opportunities I see coming a few years down the road.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of (, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved 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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in