About a month ago, at the depth of the banking crisis, fear and bearish sentiment was peaking. It is so easy to get caught up in fear-mongering headlines. We also want to stay objective, data driven, fact driven which is why we identified one ‘systemic risk indicator‘ that would help us understand whether a market crash was about to start. With the benefit of hindsight, we can now say that our systemic risk indicator was rightly chosen and able to predict a good outcome.
We said it plenty of times, and will say so again today: a lot of fear is created by officials and gurus alike. It is one of the characteristics of this current market cycle, the one that started about a year ago. We have never seen anything like this before.
Must-read articles from the last 7 months:
Are Economic Experts Lying Or Confused Or Both?
The Market Will Not Move 50% Lower Contrary To What The Gurus Are Telling You
Is Dr. Copper As Concerned About The Economy As Experts?
If anything, so far, none of these experts, gurus, officials turned out ‘to be right’ with their fear-mongering predictions.
We prefer to be risk-aware but be led by leading indicators. Charts don’t lie. Emotions are confusing as explained in 7 Secrets of Successful Investing.
That said, our systemic risk indicator, XLF ETF, with the ‘line in the sand’ level 31 points, was perfectly respected. The market tested support, it was ‘on the edge’, but both the horizontal level and the rounded structure functioned as double support.
The banking crisis appeared to be a bear trap, simply because the Fed & FDIC stepped in while experts, gurus, officials continued to sing the ‘crash is underway’ mantra.
The beneficiary of all this? Gold & silver. That’s because the real reaction to the banking crisis was another ‘liquidity injection’ by the Fed, which is what pushed gold & silver higher.
In our latest Momentum Investing alert Portfolio Charts, Sentiment Insights, Silver & Lithium Updates we refreshed our top silver stock selection. Tiny detail: at this very point in time, our silver position in our portfolio has the most unrealized gains (likely to become a multi-bagger for our members).