Regardless of what others might say, there is no quick fix for the economy.
To illustrate this point, a friend of mine recently sent me a chart which I would like to share with you. This charts shows that we may be going into a prolonged period of no growth overall in the stock market. The NASDAQ peaked at 5,132.52 on March 10th, 2000. The NASDAQ market is in many ways more important than the DOW, and should be considered more of a leading indicator. If that is truly the case, then we have been in a bear market for the last eight years.
I expect to see a prolonged economic climate that is not conducive for stocks to move higher. However, there will be pockets of opportunity where certain markets and sectors will move higher.
All in all, this is not a rosy picture for either the US or world economy. As I have said many times on this blog, these are trading markets and not markets to hold long-term.
Trading throughout the balance of this decade and into the early part of the next decade is going to be the key to survival and for recovering the profits in your portfolio. We strongly recommend that you approach these markets with some level of expertise and knowledge of technical trading.
The future is going to be the future and we need to take advantage of every moment and prepare ourselves to be the very best we can be in whatever business or endeavor we are pursuing.
Every success in the future,
Adam Hewison
President, INO.com
Co-creator, MarketClub
personally, I feel that the stimulus was like keeping a dying man on a ventilator, once it is removed, everyone knows where the economy is headed. I maybe wrong but that is what I feel is happening to this economy.
Why is everybody worried about US debt? The problem is European debt. Europe is where we have generous social benefits and European debt is in danger of falling out of fashion. Remember everything is benchmarked against the dollar. Event gold and oil.
James,
I've found that "going macro" as a trader can drive you nuts. There are experts with opinions on all sides of an issue. For example, where one might say the US is going to collapse, another points out that the US debt to GDP is improving and everything will be fine.
This is why I think Adam is right...all the economic information in the world eventually becomes reflected in the prices of the commodities, equities and futures. We can have fun speculating on the root causes, but we should place our money on what's happening, not on theoretical predictions.
If we do end up with hyperinflation, however, "things" tend to do well: commodities, precious metals,foods, real estate, oil, etc. Just use the charts to time your purchases. Patience is key here. The most successful trader I know personally makes millions/year and is out of the market 95% of the time. He only swings at perfect pitches.
Oh, and by the way, if we end up in a deflationary or a stagflationary environment, commodities will still do well in the long run.
Cheers
I have to agree. I think we are sideways plus or minus 2k points in the DJIA for the next few years. I have liquidated all my long positions in the past few weeks. I am only day and swing trading. I believe this is working out better for me. Fortunately, I am unemployed, so I have made the markets my full time job. It's ok, but not really what I had aspired to be. But it is providing a living for me and my family. Hey, I always said I wanted to work for myself...just never dreamed it would be this!
Domino,
Every success.
Adam
Ralph,
Good points. On the crash of '29 I am mostly interested in the shape of the chart rather than the magnitude or the duration. I think we can clearly see the general shape occurring again in 2008. I focus on the aftershocks because they suggest what may happen in the future. Try overlaying a fibonnaci on all these charts...quite fascinating.
I am also very cautious going forward as we see one country after another announcing debt problems (Greece, Portugal, Ireland, Iceland, Vietnam, Spain, Argentina, Italy...) and the grand daddy of them all is the US's unsustainable debt. These other countries may be the canaries in the economic coal mine.
Cheers
Okay, lets assume the worst. The market will trade sideways until the next super crises with hyperinflation.
Other than short term trading now, where do you put your money to prepare? Gold? Anyone have any other suggestions?
James,
Thank you for your feedback.
I think for the time being we will be looking at trading markets as opposed to long-term buy and hold markets.
Having said that I think looking at some of world commodity markets and certain stock sectors will prove to be successful. Using our SmartScan technology is a tool that you can use to help spot emerging and new trends.
All the best,
Adam
Thanks for your support Adam.
Having your posts really helps my confidence
using the Trading Triangles to keep my piggy bank
above water.
I'm using the sector rotation method I found at
http://tv.ino.com/premium/title.html?movieid=230
and the long & short ETFs with Trade Triangles now.
This method keeps me in a 1-3 month trading range
and I only trade a few times a week.
Before I found Market Club,
I tried day-trading for a few months to take advantage of
the whipsaws, bummer, I'm not expert enough to be a day-trader.
As I'm new to stock trading and own only gold stocks for now, that is why I was asking your view on short term and long term stocks. I should have been more specific and told you I was asking about gold stocks. I need all the help I can get.
Thanks
Craig,
I think you're in the right place. You will find lots of good and useful information on this blog.
If you're not already a member of MarketClub I highly recommend that you try it for 30 days risk-free. Some of the tools that we have in their are specifically designed to illustrate how you can find winning trades using our trade triangle technology
All the best,
Adam
Not trying to be a pest but...
One might suggest, just from a quick glance at the chart, that the bull market 1948 -1964, actually began 6 years earlier, around 1942-1943.
Regardless... the point is well made that we're in a trading range now and that buy-and-hold is not a winning game plan.
One thing the chart shows clearly... the crash of 1928/29 was a much larger event than the piddling drop we have gone through in the 2000's.
Adam,
Any chance of another crude oil video in the near future? It looks like it might be part of the sideways action you talk about here.
Cheers
DG,
It's about that time. I'll see if I can get around to doing one this coming week.
Thanks for all your positive feedback and input.
All the best,
Adam
What is your definition of short term and long term on holding stocks?
Craig,
How I define short-term and long-term holding stocks is perhaps different to other folks. Short-term to me would be anything under a month. Longer-term would be 3 to 6 months.
I do not believe we are in a buy and hold strategy mode given the volatility and the general uncertainty about the markets.
I hope this addresses your question.
All the best,
Adam
Hey Adam ,nice chart,I noticed a pattern here.Every sideways action we have been in a war.Then after the war ended for a while then the good times came.
Thanks Adam,
I think we should all be wary of being whipsawed by a sideways market. I'd be particularly careful with the industrial commodities and the growth economies -- China, India, Latin America. I would also stay out of US equities and convert my trading account to Swiss or Canadian currency. There is a rally on the USD now, but I see any USD rally as an opportunity to escape the currency. Current US debt is not sustainable. The economy will rebound in the short term, but the next crisis, which isn't too far away, will be twice as bad because the US didn't take the pain in 2008.
Is it possible that the next rally in gold in 15-17 months (see your 5 reason for gold video) will correspond with the complete collapse of the US dollar and the onset of hyper-inflation (?)
Once again, I refer everyone to a chart of the 1929 collapse...History does tend to repeat.
The good news is that people have to eat in any economy, so that's my focus now. I like the agricultural commodities.
Cheers
With my calculation, S&P 500 will be back 1082.73, then 1068.29 in next a few of days. You can check more target prices for some stocks as ARCL, DELL, MSFT,.. in next a few of days.
With my calculation, NASDAQ will be back 2176.55 in next a few of days. You can check more target prices for some stocks as ARCL, DELL, MSFT,.. as well indexes as S&P 500 in next a few of day.
I have followed your comments for quite some time and do enjoy them. I am in the cattle business as well as the oil and gas business. I have played around the edges of trading options on cattle futures and oil futures. With the market being what it is I believe the time is right to capitialize in these markets with the right trading strategy moving in and out of the market so to speak. I would appreciate your thoughts on how to get deeper into this.
Douglas
Douglas-
Have you tried hedging your futures positions with short out of the money options?
Regarding cattle, it looks like herd liquidation over the last year has resulted in tighter cattle supplies...prices have been going up!
Greg Mitchell
Greg,
This blog is not a platform to solicit business.
Thanks,
Adam
Dear Adam, Thanks for updating on long term cycles of markets.