The Great Fall began in February 2021
The market has entered in a correction phase from the mid of February ‘21. Although the indexes continued their rising course,
many stocks began falling from then. In February ‘21 90% of the stocks were above their 200 days SMA and now this percentage
has fallen to 30% (See the Percent of stocks above 200-days average chart – the decline began in Feb 11, '21). With this movement
the market entrapped the vast majority of novice traders and led their portfolios to heavy losses.
As I’ve written in my post of Apr 3, 2021: «1) The indexes may sometimes be lying. The indexes may rise but the majority of the
stocks will fall. This happens with the rise of selected index-heavy stocks. 2) The Advance Decline Line may be lying because it
measures how many stocks go up or down, not how much they go up or down. So, for 3 days the Advance-Decline difference may
be positive and these stocks will rise 1% each day and one day the Advance-Decline difference could be negative and the same
stocks could fall 6%. The Advance Decline Line will ignore the 3% fall and keep on rising. 3) Therefore the only criterion that we
should trust completely is whether our own portfolio goes up or down and we have to make our investment decisions based on
this criterion. For example, the HERCULES portfolio has so far not followed the rise of indexes, as shown below. 4) Concluding,
we can place ourselves in stocks with as good fundamentals as possible by strictly following the rules I describe in my post
"You can’t beat the market". However, from now on we must be on high alert and be prepared to hit the sell button anytime
(or with nearby stop losses), because the situation can change abruptly and may lead us to big losses».
As seen in the charts above, the market is, now, entering in that phase where the indexes start to fall amid the correction of the
leader, index-heavy stocks like FB, AAPL, AMZN, NFLX, MS etc. Whether the indexes technically react from these levels and even
reaches their all-time highs or not, we are entering a catastrophic bear market which may last many months, even years.
During that period I predict that most of the heavy portfolios will have big losses. Only the institutional investors that move the
markets and the very experienced individual investors will survive and even raise their profits.
Whoever tries to catch the ‘falling knife’ will be cut. The traders have become addicted to tactics of 'buy the dip'. This tactic was
so far successful because the next dip of the indexes and the index-heavy stocks was higher, but from now on may the next dip be
lower, leading to bigger losses each time.
In the above charts notice that,
1) In the monthly IXIC chart the MACD indicator has given a selling sign and possibly the prices will reach the 200 months SMA
– bold black line - in the next time period (months or years). See also the GOLD/IXIC chart which may be rising in the next
time period.
2) In the weekly Crypto Total Market index chart the MACD indicator has given a selling sign a long time ago and possibly the
prices will reach the 200 weeks SMA – bold black line - in the next time period (months or years).
3) The whole market index DSIR has given a MACD sell signal since Feb 16, 2021.
4) Both the VIX index 30 and 200 months SMAs are rising.
In the following snapshot you can see the course of the stocks of a typical micro investor’s portfolio, the HERCULES portfolio.
https://www.tradingview.com/x/SFB5nUPg/
In the next snapshot you can see the course of the FAANGT stocks. Notice the impressive entrapping ‘sudden fall’ movements
of AMZN and NFLX stocks.
https://www.tradingview.com/x/m8GkhrhH/
In the next snapshot you can see the course of various selected stocks. Notice that stocks with bad fundamentals like JUMIA
have already huge losses (-90%).
https://www.tradingview.com/x/WfaiDcsh/
Whoever wants to protect his capital may read my posts "How we deal with fall" and "You can’t beat the market" and strictly
follow the rules I describe there in.
I wish everyone good luck and over all good health.
Disclaimer
The author of this idea is not an investment advisor. The preceding content is intended to be used for informational and
educational purposes only. It is not an advice or inducement for the purchase or sale of the products mentioned.
Before making any investment based on your own personal circumstances, it is very important to do your own research
and analysis and also take independent financial advice from a professional to verify any information provided here.
many stocks began falling from then. In February ‘21 90% of the stocks were above their 200 days SMA and now this percentage
has fallen to 30% (See the Percent of stocks above 200-days average chart – the decline began in Feb 11, '21). With this movement
the market entrapped the vast majority of novice traders and led their portfolios to heavy losses.
As I’ve written in my post of Apr 3, 2021: «1) The indexes may sometimes be lying. The indexes may rise but the majority of the
stocks will fall. This happens with the rise of selected index-heavy stocks. 2) The Advance Decline Line may be lying because it
measures how many stocks go up or down, not how much they go up or down. So, for 3 days the Advance-Decline difference may
be positive and these stocks will rise 1% each day and one day the Advance-Decline difference could be negative and the same
stocks could fall 6%. The Advance Decline Line will ignore the 3% fall and keep on rising. 3) Therefore the only criterion that we
should trust completely is whether our own portfolio goes up or down and we have to make our investment decisions based on
this criterion. For example, the HERCULES portfolio has so far not followed the rise of indexes, as shown below. 4) Concluding,
we can place ourselves in stocks with as good fundamentals as possible by strictly following the rules I describe in my post
"You can’t beat the market". However, from now on we must be on high alert and be prepared to hit the sell button anytime
(or with nearby stop losses), because the situation can change abruptly and may lead us to big losses».
As seen in the charts above, the market is, now, entering in that phase where the indexes start to fall amid the correction of the
leader, index-heavy stocks like FB, AAPL, AMZN, NFLX, MS etc. Whether the indexes technically react from these levels and even
reaches their all-time highs or not, we are entering a catastrophic bear market which may last many months, even years.
During that period I predict that most of the heavy portfolios will have big losses. Only the institutional investors that move the
markets and the very experienced individual investors will survive and even raise their profits.
Whoever tries to catch the ‘falling knife’ will be cut. The traders have become addicted to tactics of 'buy the dip'. This tactic was
so far successful because the next dip of the indexes and the index-heavy stocks was higher, but from now on may the next dip be
lower, leading to bigger losses each time.
In the above charts notice that,
1) In the monthly IXIC chart the MACD indicator has given a selling sign and possibly the prices will reach the 200 months SMA
– bold black line - in the next time period (months or years). See also the GOLD/IXIC chart which may be rising in the next
time period.
2) In the weekly Crypto Total Market index chart the MACD indicator has given a selling sign a long time ago and possibly the
prices will reach the 200 weeks SMA – bold black line - in the next time period (months or years).
3) The whole market index DSIR has given a MACD sell signal since Feb 16, 2021.
4) Both the VIX index 30 and 200 months SMAs are rising.
In the following snapshot you can see the course of the stocks of a typical micro investor’s portfolio, the HERCULES portfolio.
https://www.tradingview.com/x/SFB5nUPg/
In the next snapshot you can see the course of the FAANGT stocks. Notice the impressive entrapping ‘sudden fall’ movements
of AMZN and NFLX stocks.
https://www.tradingview.com/x/m8GkhrhH/
In the next snapshot you can see the course of various selected stocks. Notice that stocks with bad fundamentals like JUMIA
have already huge losses (-90%).
https://www.tradingview.com/x/WfaiDcsh/
Whoever wants to protect his capital may read my posts "How we deal with fall" and "You can’t beat the market" and strictly
follow the rules I describe there in.
I wish everyone good luck and over all good health.
Disclaimer
The author of this idea is not an investment advisor. The preceding content is intended to be used for informational and
educational purposes only. It is not an advice or inducement for the purchase or sale of the products mentioned.
Before making any investment based on your own personal circumstances, it is very important to do your own research
and analysis and also take independent financial advice from a professional to verify any information provided here.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.