Uphill Task to Invest in Stock Market Crisis

Posted on March 18, 2020 Written by
Invest in Stock Market Crisis

When Dow Jones Index drops below 20000 points during intra-day today (quickly recover above it, although may fall below again in near future), this is about last 3 years low. This implies an investor is saving 3 years of investing time if investing in current level. So, when one could invest in last 10 years low for a major stock index (eg. US S&P 500 or Dow Jones Index), it means the crisis helps one to “jump queue”, saving 10 years of waiting time.

So, when looking backward, history does help one to decide the entry and exit, especially the stock market cycle which could be 5 to 10+ years long. Current bull for global/US stock market (Mar 2009 – Mar 2020) is 11 years, the longest in the history of stock market so far, after US stock market lost more than 1/3 of market cap so far, Dow Jones Index falls from nearly 30000 to 20000 points in 1 month. Despite a bear market is confirmed, this is not yet low optimism < 25% based on Ein55 styles, only a mid-size bear so far.

However, the waiting time has to include the fall + recovery again, therefore some investors prefer to wait till the uptrend phase before entry which is easy to miss the boat (1 chance left) when an entry price is not defined. If an investor enters as contrarian approach first, there are at least 2 chances: fall below the desired entry price and again above the entry price after a period of waiting.

Ein55 members, please plan your entries, how many bullets to use: 1 shot or multiple shots. Don’t end up no shot at all when the game is over.

Learn from Dr Tee free 4hr investment course to plan for your “bullets” to shoot, investing in stock market with LOFTP (Levels 1-4, Optimism 0-100%, Fundamental – Strong/Weak, Technical – Up/Down, Personal – Trade/Invest) Strategies to leverage on current global stock market crisis. Register Here: www.ein55.com

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Filed Under: Market Cycle Investing, Market Optimism, Personal Analysis, Stock Market, Technical Analysis Tagged: , ,

Market Signals from Bull to Bear

Posted on February 8, 2018 Written by

Market Signals from Bull to Bear

Global Bond Market has been at historical high prices over the past few years. It is possible that the crash of bond market could be the next black swan. Currently the funds from bond market is transferred gradually to stocks, properties or safe cash in banks. The changes are still not an alarm yet but if both stock and bond prices drop significantly over a period of time, an investor would have to be very careful on potential market signals from bull to bear.

This is the characteristic of last phase of bull run with high prices, any drastic movement will shake the confidence of investors who have high profits in stocks. The solution? Sell some as well to take partial profits. The initiation of market signals from bull to bear is not confirmed yet.

VIX (Volatility Index) is shooting up to more than 17 but the uptrend fear may not be sustainable.

During 911 time, a drop of 600 points overnight is about 5% to Dow Jones, considered a disaster. After Dow Jones is doubled since then till now, the impact of the same drop of 600 points is only 2.5%.

We need to compare the stock market in both relative and absolute ways. A stock market cannot be bullish every week, needs to take a rest, allowing some people to take profit and some people to enter the market again.

Since the global stock market is over 80% Optimism, US more than 90% Optimism, it could be a smart move to adopt a shorter term position.

High Optimism = bonus price, we want to sell high to others. Low Optimism = discounted price, we want to buy low from others. Stock market has returned the last 2 months of bonuses (gains) after the correction so far. Each of our unique personality will determine the unique low and high optimism, forming a personalized trading plan or investing strategy.

A stock trader would not capture the falling knife, waiting patiently for the uptrend to come back again after breaking the resistance to form higher lows. Global stock market is “tired” after the bull is running for so many months, need time to rest. A trader would not guess the direction of market or future prices but self-discipline is important (entry, take profit, cut loss, position sizing, etc). An investor would use the market greed and fear as additional weapon to fundamental analysis. Ability to take actions aligning to own personality is key to success.

Eventually the train will reach the terminal of “Bull Line”, changing the direction to “Bear Line”, these are market signals from bull to bear. Knowing the risk tolerance of oneself is critical, knowing when to alight. Before changing the lines from Bull to Bear, we will see some road signs, now a few are shown, more will be seen in future.

Learn from Dr Tee through Market Signals from Bull to Bear to take actions in the current stock market.

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)

 

Filed Under: Stock Market Tagged: , , ,

Investing Strategies for US Stock Markets (S&P, Dow Jones, Nasdaq, Russell) at Historical Peaks

Posted on October 4, 2017 Written by

Ein55 Newsletter No 075 - image - Market Peak 2

US major stock market indices (S&P 500, Dow Jones Index, Nasdaq, Russel 2000) set new record of historical high again with 8th quarterly gains in a row. The earlier nuclear “crisis” has set a nice market correction for short term traders to buy low and sell high now.

US and most global stock markets (including Singapore) are still under a bull market but mainly suitable for shorter term trading due to moderate high market optimism. Despite at historical high stock prices, long term Optimism for US stock market is about 81%, still have room for further growth, although it is limited by probability.

One has to know own’s personality (trader or investor), designing the right trading plan or investing strategy for the current stock market. The US market is ideal for short term trading, buy high sell higher, especially after breaking 2500 points for S&P 500.

Singapore STI is still supported above 3200 points with Optimism about 48%, getting stagnant over the past few months. With global stock markets are still at relatively high optimism, market risks are getting higher but there are still opportunities for everyone but need to align with own personalities:

1) Short Term Traders: Buy High Sell Higher (Duration: weeks)

– entering after each break out of high resistance but not hesitating to exit when the signal is reversed

2) Medium Term Traders: Buy Low Sell High (Duration: months)

– buying after intermediate correction, focusing on bullish mid-term stock markets

3) Long Term Investors: Sell High Buy Low (Duration: years)

– selling stocks on hold at high optimism with declining bullishness, waiting to buy low during the next global financial crisis.

Learn further on Investing Strategies for US Stock Markets.

 

Filed Under: Market Optimism, Market Outlook, Stock Market Tagged: , , , ,