Here is what I see
Today’s 12% smash in the market is fully on scale with the crash of 1929. It’s not a 1987 purge within a bull market its a crash inside of a bear market. How can I say that? Because that is what Charles Dow’s methodology says. (Dow Theory). Using his theory I identified the day this bear market began and have never waivered from that call. The Bear market actually began on Oct 3rd 2018, but we did not know this until December 14th 2018. Dec 14th was the day that according to Dow Theory we triggered a bear market sell signal. That means that everyone should have “gotten out of the water” and headed towards safety. (short term treasuries). At that point for the traders out there you can trade the market (up or down) but do so knowing that the primary trend is now down.
But of course the FED did its pivot in Jan 2019 and reflated the market for another year. Of course this required Non-QE beginning in the early fall 2019. Since Oct 2018 the transports have diverged from the Industrials. This meant that the sell signal given in Dec 2018 remained valid. One had to be patient, but Mr. Dow proved to be correct despite all the naysayers. This always happens at the top of a bull market.
Since we now know that the monied Wall Street insiders knew the FED was going to announce Sunday afternoon 700B QE with zero rates they crashed the gold market on Thursday and Friday. They wanted in at discount prices. Monday morning was the bonus as one more gold raid led to the final wash out of all weak hands. An incredible buying opportunity for those who had any money left and the guts to step up to the plate. (I had little of each, but gave it my all of what I had remaining)
To me today was a momentous day because I think it showed the two prominent trends now in the market:
1.The FED has now lost control (market down 12% after them giving it their best shot)
2.The gold bull market never ended. Now that the big money has their starter positions they can now begin to move into the sector.
The GDX & GDXJ ETFs had inordinately large moves today because they were playing catch-up to their underlying NAV’s. But we saw awesome moves in some beaten down stocks. Up over 50% from intraday lows… unlevered.
The two trends have now reversed. Over time money from across the spectrum will come to recognize this.
Thanks Plunger for taking some time to share your analysis !
I have not sold more than 5-10% of my miners and am still holding.
I decided to go short the Nasdaq on last Friday after the Trump Pump.
Do you agree that there is still much room to fall further on QQQ ?
Do you agree that it will be more a falling rock type event since Mr. Market has definitely lost confidence this week-end ??
Thanks !!
No I don’t agree. Not saying it won’t continue to fall like a rock, but we are now late in the decline. S&P 2100 might be the end game area for now. But it could find its bottom at any time now. We have had the crash. Ultimately lows will be far lower than this level, but this move is getting well cooked.
For me personally I would no longer short the market with newly deployed money.
Thanks Plunger. I take those words of wisdom.
Did you get any MAG share under $4? I had a “dear in the headlights” moment and missed it. You think I’ll get another chance?
No but I got some in the low 4’s. Also bought NG and MTA pretty much at the lows. But the silvers do scare me as industrial activity could lead to a lower silver price. Careful with the silvers. Gold is the play here
Nice…
Thank you Plunger! When will you be writing a follow up on the Rambus site for your PBC work? I see the last one still shows 2/29.
I really don’t have a writing schedule
This SM crash looks pretty close to over IMO. I am thinking one more down day then we begin the BMR process
BMR, then down further, but how far I wonder Plunger. The way I see it, most stocks will be near worthless after the financial apocalypse that’s unfolding.
The best source of opinion to inform on “how low it will go” is no doubt John Hussman. I highly recommend reading the last 12 months of his writings (it’s free)
But here are a few principles off the top of my head. Virtually every bear market violates the peak of the previous bull market. That would be 14,000 in the DOW and 1550 S&P for starters.
Also just to get to historical bear market valuations the market would need to drop 65%. And of course the punch line is that if the preceding bull overshoots to the upside then the bear typically overshoots to the downside.
Those are the facts
What it ends up doing is kind of guesswork
Thanks for that, and I’ll read John’s work.
Really appreciate you taking the time yo share your thoughts Plunger. Your analysis has been unwavering and superb.
Interesting that early October is the same time that the Dow/gold ratio topped as well.
Thanks for that!