The most anticipated stock market crash did not materialize in 2022, it is also not going to happen in 2023. The vast majority of investors was anticipating another leg lower in markets. The exact opposite happened. Was it possible to know this outcome which, as it was happening, seemed to be the least likely and most counterintuitive outcome? Yes, is the answer, you should simply follow the timeline of InvestingHaven’s blog. Let’s play it back for you and consider this as an educational opportunity.
End of August, the summer rally was over. We wrote Is Apple About To Lead The S&P 500 And Nasdaq Lower In September? in which we made the point that Apple would lead stocks lower.
We added “While many investors might go in ‘panic mode’ in September, with a retracement in the cards, we prefer to focus on the longer term structure.”
Volatility is rotation in disguise. The September decline was meant to terminate the Covid stock market trend. As said: Covid Momentum Stocks Are Back To Ground Zero. The market “needs volatility” in order to create new trends.
When the S&P 500 closed below 3666 points on Sept 30th, the entire investor community started panicking. A Bottom In Markets Feels Ugly! This Is What It Looks Like. We noticed that extreme anxiety levels were being hit as said in Selling Intensity Indicator Is Hitting Historic Extremes In 2022.
Remember, the consensus trade will hardly even work out!
In the meantime, our Dow 20 year chart analysis revealed some interesting insights:
We don’t believe that the Dow Jones will start a massive sell-off and are patiently looking for evidence that the market proves this right.
From the Dow Jones 100 year chart analysis:
The one big difference between now and back then is that those previous rises to the top of the channel came with very steep, multi-year rallies. The 2021/2022 test of the top of the channel did not come after a steep rally.
As the investor community continued panicking, we started seeing constructive setups in our leading indicators: Markets: This Leading Indicator Is Working On A Long Term Bottom.
On the day of the major breakdown, Oct 13th, we came out and called for an epic bottom in markets, contrary to what 99% of media and experts were telling you. This is what we wrote: The Market Will Not Move 50% Lower Contrary To What The Gurus Are Telling You.
A few days later, we followed up with our Nasdaq Indicator Suggesting Selling Pressure Is Over, End Of Year Rally Underway.
In the meantime, we extensively covered the biggest topic of the year: Battery Metals Is Booming Business. It still is, by the way.
Be careful following your emotions, better stay focused on data points and leading indicators. Our methodology has proven to work in an accurate way as evidenced by the timeline of our public articles.
