The Stock Market Is Now A Hopeless Situation - Mike Swanson (02/11/2016)
I'm not going to sugar coat things for you, because the stock market has become a hopeless situation for most people.
I saw this happen in the last two bear markets when at the start of them people failed to accept what was happening in the markets until it was too late.
And now here we are again.
This is a real bear market and bear markets take money away from most people.
First of all it is easy to recognize that this is a real bear market.
I know a lot of people are confused, because they are watching every little gyration in the market and reading every little story on the internet.
Many are calling for a bottom and saying buy this or that stock and then the market falls anyway.
But then they find a new reason to see a bottom.
So the small fry gets confused while insiders dump.
Apple insiders sold off over 16% of their holdings in the last six months while the fourth quarter of 2015 saw the 4th largest amount of insider selling in the stock market in a 90-day period EVER.
But many people heard calls for giant gains and predictions for another stock market boom and got confused with all the contradictions. All the experts on Barrons new years were predicting huge gains and it is hard for people to go against the Wall Street experts.
But this market is not confusing at all when you focus on the big picture instead of the short-term noise.
In fact it is crystal clear what is happening.
All markets move in cycles.
I call them stages.
There are four stages to a financial market cycle in a stock or entire financial market. As you know you can have a bull market. Before a bull market starts though you usually have a stage one basing phase in which a market simply goes sideways and builds a base.
Then it breaks out and begins a full blown stage two bull market that typically lasts for several years. Then there is a stage three topping phase and then a stage four bear market.
There are various technical indicators you can use to determine when these stages are coming to an end so you can make the proper adjustments. That's a topic a little too big to get into now, but we can look at the basics right now. I can quickly show you one important indicator to watch to identify the trend the market is in.
That's the long-term 150-day moving average, which is simply a line plotted on a chart using the average price number of the past 150-days.
In a bull market this line slopes up on a chart and the price of the market tends to stay above it, so it acts as a nice price support level in a bull market to make for a good entry point timing mechanism.
In a bear market this line slopes down on a chart and the price of the market tends to stay below it and it acts as resistance.
So you can use this moving average to quickly identify the trend of a market. Then you can know if you should be bullish on a market or not.
And you can see right now that the US stock market averages are clearly in a bear market now.
Here is the Nasdaq.
The Nasdaq has been below its 150 and 200-day moving averages now for several months.
This is why most stocks have been falling for months already and most people are losing money in the stock market this year.
And it's getting worse, because those moving averages are now curling down and the Nasdaq is already below its lows of last August and January.
There were people trying to buy in hopes that the lows would hold last week, but they have failed and now buying the Nasdaq and the fad tech stocks is a hopeless situation.
Take a look at the S&P 500.
It also is below its 150 and 200-day moving averages and those moving averages are sloping down.
However, I read some articles this week by people saying that they should ignore the weakness in the Nasdaq and just buy "strength" in the S&P 500.
They claimed that the S&P 500 holding up meant everything was fine.
Well it's not.
All that is happening is the S&P 500 has gone down to support and is trying to bounce off of it, but it doesn't look like it will even succeed at doing that.
It looks like all it is doing is pausing before it will go through its lows and dump.
What really happened is that most people do not want to admit to themselves that they are in a bear market - because that would mean taking action - so they come up with reasons to believe that the stock market will go back up for them.
This "S&P 500 is the strength" reason is just something they came up with on Monday and when it fails they will come up with another one next week and many people will grasp on to whatever that next reason is to justify holding in the face of more losses.
You see that is what makes bear markets so cruel.
They cause people to go into denial when it is so unnecessary for them to suffer like that.
Bear markets create avoidable tragedies for so many.
You see the stock market stages also have a psychological pattern to them.
Look at this.
The masses are now in the denial phase.
Most people will just hold on to falling stocks until everything totally crashes and then they will panic and capitulate on the bottom.
Then they will get despondent and give up on the stock market game forever.
That's what everything is headed for and I do not want this to happen to you.
You can make changes.
All you need to do is accept the reality of what is happening in the financial markets.
I have been doing videos for months with David Skarica warning people of what was happening and why.
I also wrote a book in September called the Stock Market Bubble Bust of 2015 and Beyond explaining all of the signs that a bear market was here and proving a game plan to actually profit from it all as an investor.
You do not have to do complicated trades to come out a winner.
You just need to get on the right side of the market.
People think that is hard to do, but it really isn't.
The problem is the masses remain in denial.
Every month Ameritrade releases an analysis based on the trading activity of its millions of clients.
The individual investors with Ameritrade accounts actually BOUGHT more stocks than they sold last month while the market fell on them in desperation.
January earnings announcements seemed to draw some attention within TD Ameritrade client accounts. Facebook Inc. (FB) and Apple Inc. (AAPL) both announced earnings in January and were net buys. Facebook's share price surged after it beat expectations in both earnings and revenue. Netflix.com (NFLX), which announced a global expansion of its streaming video offering earlier than expected, was also a net buy in January.
If you have been following me for awhile you may remember that the CEO of Ameritrade said that this data showed that people were so fully invested with many on margin in the summer that he thought the stock market would fall.
Well he was right and I made a post about what he said last summer before the August drop.
And the stock market is still falling.
All of the so called FANG stocks that the Ameritrade people chased in this report topped out in January and have been dumping ever since.
This is what MOST people do in bear markets.
Instead of adapting with the market they just keep trying to look for bottoms while active traders sit there and just try to chase what happens to be up big that day in what is desperate gambling.
When they should get more cautious they do more reckless trading.
Then they get caught holding the bag as everything goes back down again and again.
The stock market is a hopeless situation for such people.
If you have felt trapped in this stock market this year then now is the moment to take control of your situation, because the sooner you do it the better.
Most people need to simply raise up a cash position in the market.
I have said in interviews that I have done this year that the average person would be best to do some serious selling in their accounts and put some of their money in gold, because it is now starting a stage two bull market and will benefit from this US stock market bear market in the long run when the Fed ends up getting all dovish again and desperate.
There is no reason for anyone to be fully invested in the US stock market anymore.
None at all - not when it is in a bear market like this.
If you are fully invested then please sell and save yourself. Talk to your investment advisor about reducing your risks.
The Nasdaq broke down and the rest of the market is going to follow it this month by the looks of it.
That will just mean another big leg down within this bear market and no one knows when it will end.
When you heard people make predictions for a bottom in the market just ask yourself what are they basing their predictions on. Can you verify it or is just a more hope based on more hopes?
Are they looking at the big overall trend of the market or not?
Now of course big money can be made betting against the stock market and individual junk stocks in a bear market like this, because they tend to go down much faster than they go up.
In fact they tend to crash.
So at the start of this year I launched a new program to help people identify POS junk stocks to bet against and make money from the stock market declines.
This program is working to say the least and it's fun.
Last week one of the stocks I am betting against crashed over 20% in a day.
Now this new program is not cheap, because it is the real deal.
But it really is the only way to actually make winning trades now in the US stock market.
You can get in it by going here.
UPDATE: 2/11/2016: - 11:00 AM EST:
I am going to take the POS Stocks Program offer down tonight, because once the market goes into a real meltdown it is too late to make entries in POS stocks and also I do not want to banging the drum on shorting during a meltdown either.
So if you are interested just go here.
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