… Inherent In the System’

It may as well be a Monty Python skit.

The number of opinions forecasts, pontifications and gesticulations have reached levels beyond the absurd.

Everybody’s important and has some intellectual and/or philosophical missive to promulgate.

We have great levels of insight like the selected items below. As promised, these comments were taken from the article linked in the last post.

“I don’t need to pay some 78 year old to hold 1/2 my money in cash”

“What a joke. We’re heading for multi-year blow-off top”

“78 year old fund manager loses his azz … markets going nowhere but up”

“Parabolic increase to nosebleed levels and an epic explosion 3 years from now.”

Seems our idiot/lazy Boomers, Gen-X-rs, Millennials, Gen-Z-rs, and just about everybody else, is the genius in the room; except for the 78-year-old.

He’s just a buffoon.

If someone has no real skill, experience or initiative, they resort to trash-talk like we see above.

Getting the right experience is the hard part.

Having experience in the markets involves many years of education (i.e. losses).

Just for documentation’s sake, let’s take a look at two examples of what experience looks like; each in their own respective industries.

Exhibit A:

Go ahead, check out this Bubba from Amarillo, Texas.

His customers drive from neighboring states, hundreds, if not thousands of miles away to have him rebuild their transmissions.

Within the first 5-minutes of the video above, there’s probably 30-years of experience on display.

I would suspect his rebuilds go for top-dollar; rightly so.

Then, we have this:

Exhibit B:

Yesterday’s market action, and today’s, has happened before.

That is:

A sharp multi percentage point, headline grabbing spike higher (within a down market), that’s immediately reversed the very next day.

Not only that, but the reversal also signified a bear market had started in earnest.

S&P 500, SPY, Daily Chart

Let’s set the stage.

In our example, the S&P had already topped and reversed.

It spent the next seven months heading lower and then retracing upward to an eventual downside reversal.

The next leg down continued, but then a few days later, there’s a massive, headline grabbing, upward spike.

Is the bear market over?

Is this the signal to buy the dip like our ‘experts’ above think for the current situation?

The next day, price action reversed the entire gain (like it has done today).

The chart shows the result.

From a personal standpoint, a 78-year old that’s still mentally sharp enough to provide his services and is not an obvious (globalist) sell-out the likes of which are on CNBC, then I’m very keen on what he would have to say.

His message: It’s the biggest bear market of his life.

Secondly, as Dr. Elder has said, ‘Trading is an old man’s game’. A good memory is critical to creating an edge.

In our example, I remember that upward spike well.

It was a Thursday.

The next day, price action reversed hard to the downside.

It never looked back for nine months.

Summary:

Is the S&P scenario described above, where we are now?

History never repeats itself exactly.

However, one can propose with some level of confidence, if today was the kickoff to the next leg, it has potential to be the fastest, farthest down price action in market history (not advice, not a recommendation).

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279