By Panayotis Sofianopoulos – Author of HERETIC INVESTOR
… Bear Bites?
• The Dow Jones Industrial Average (DJIA) on Feb. 5th of 2018, plunged nearly 1,600 points, making it the biggest one-day drop in history.
• On Feb. 8th , 2018 DJIA moved 1,033 points lower from its previous close.
• On March 22nd of 2018, DJIA fell 724 points from previous close.
• The next day, March 23rd of 2018, DJIA dropped another 424 points, from previous close or lost totally 1,149 points in just two days.
About the same time, we had a triangle formation break down, theoretically indicating that DJIA will move towards 22,000 points.
Do the bears that are almost absent for years, show their teeth?
Probably yes… because all the above are real technical facts.
The time that I wrote this lines, the Fear and Greed Index that showing the average feeling of the overall market short term, has gone to 7, showing extreme fear.
The big majority of market ‘players’ are sheeple (inexperienced people, crowd, flock) and market usually is moving in a direction, driven by the crowd’s excesses, influenced by overall psychology: the market moves upward if the psychology is good (bull market) or downward if it is bad (bear market).
Now, what is the cause for the big the aforementioned plunges (at the beginning of the article), that have happened closely to historical highs of the Index?
Maybe they are the worries for a trade war or … anything else ; technically speaking, we don’t care for the exact causes, we care for result; and the result and the same time fundamental cause for every market move, is the continuous war between buyers and sellers. It seems that from February 2018 till today (March, 2018), sellers are winning big battles for first time in years. And as the sheeple and as a rule, is always get ‘slaughtered’, we may expect that the same rule will stand also, this time. And they will get ‘slaughtered’ by whom? … by the ‘smart money’.
And who is the ‘smart money’? They are not always the same market ‘players’ because no one is 100% perfect every time that he deals with stock market. ‘Smart money’ is usually some big ‘players’ that have already win a lot from market’s previous rise and they want to secure their profits. So they choose to sell generally in high levels and they don’t care to find the absolute peak; their main priority is to secure their existing profits and in order to achieve this, they choose to sell when they have yet, the comfort, to sell when the overall psychology is quite good, in other words, in high levels that the sheeple think that occurs just a correction and many of them, are thinking to buy on dip, to down average their cost on their portfolios.
Where is market today (end of March 2018)?
And because ‘smart money’ are not just but mainly are, big money (big portfolios), they affect a lot the overall supply, causing sellers to prevail over buyers and thus, the market turns from bull to bear. After a while, more market ‘players’ that want also to secure their significantly reduced profits, are choosing to sell, increasing fall pressures, later more other ‘players’ are choosing to exit market because now, they have small loses, and consequently they feed the bear pressures.
… and eventually comes a time that sellers are much more than buyers and the sensitive psychology of market turns to negative, and right after, we have a persistent bear market, that spreads fear or even panic, almost to everybody.
And why I chose to show you DJIA, instead of S&P 500? Because the big money that are usually also ‘smart money’, invest in big companies like those of DJIA. So the moves of this old and very ‘heavy’ Index (of very big companies) is of a great significance.
Have also in mind that market and basically economy, is not as good and strong as many believe yet. Read relatively, THIS.
So if you want also to be ‘smart money’, don’t rely on your efforts to find the absolute top, because this is impossible. Find high levels that you can easily sell and secure your profits. For as long as you winning (securing your profits) the value of your portfolio will increase and over time, with the magic of compounding and after reading HERETIC INVESTOR, you will achieve great profits!
Heretic Investor: A work smart, not hard, way to profit on Wall Street!
You can find the book on amazon (see below links):
http://amzn.to/2dz6CVV • English Version
Now on Kindle with an amazingly reduced price = no risk for you. Please understand that as a new writer, I need reviews. So I offer you this extremely low price on Kindle, for your reviews. If sales happen but get no reviews, I will be forced to raise the price.
http://amzn.to/2qsjkbU • Greek Version
Read also my articles:
• The Big Money defines markets turning points
• Choose stocks at ‘random’ and beat the market and the Pros!