Unbelievable but true. We see an increasing number of exhaustion selling signals. The Corona saga that triggered the crash of 2020 feels like it will never end. However, at a certain point this crash will end, and we start seeing signs that the end is near. Five our leading indicators show signs of selling completion, or critical support levels close to being tested now. This implies we should not be selling now, but we should be looking for the final selling points as well as selecting the best buy opportunities.
Our premium members receive almost daily updates nowadays.
We track several crash indicators, and do so to help us all (1) understand the importance of cash in our portfolios (2) understand when the selling is ending (3) so we can position ourselves at the right time with the right positions.
- Some of our key crash indicators show the first signs of a reversal, since Friday. Moreover, we see a divergence (since Friday) between our leading crash indicators and the S&P500 (also other US stock indexes).
- Moreover, our leading stock indicator Russell 2000 is now moving in a very solid support area. There is some downside, but it’s limited according to our charts.
- Lastly, the peak fear situation looks like it is now about to set some sort of secondary top: Treasuries: Once In A Decade Peak, Off The Charts Now
This doesn’t imply that stocks will reverse on Monday. Nor does it imply that there is no downside.
All this implies downside is limited. It also implies that we know exactly what we should be looking for which is the continuation of the divergences we mentioned before.
As an illustration we have this beautiful (ugly) crude oil setup: Crude Oil Crash: Mission Accomplished
We are not biased. We don’t get into stocks when they are still falling. However, we cannot ignore the exhaustion selling signals that have accumulated in the last 2 trading days.
Our premium members get almost daily updates on how the crash evolves. We give the value that investors look for in financial and social media, but they disappointingly cannot find there. On the contrary financial and social media are as confusing as can be.
The coming week will be crucial because one of the 2 scenarios will play out:
- Most likely, markets will go through one last sell off before setting a V-shaped bottom. That’s when we will get back in, with medium term investments as well as short term trades.
- Least likely, markets will slowly but surely continue their selloff, in order to reverse in the next quarter (similar to the Q4 2008 / Q1 2009 sell off and subsequent reversal). If this will be the dominant scenario we will need to adjust timing and positions.
Moreover, our members will receive 2 exclusive videos next week, depending on how markets evolve.
In the first video we will highlight learnings from the current (historic) quarter as well as opportunities/risk for the next quarter.
In the second video we will demonstrate how we do charting. Many members have been asking for the tricks of this trade, and we will do an exclusive video about how to chart as per our methodology.
