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I’m not one of the guys who like to scare others with a repeat of 2008 or 1929 crisis. I don’t think that’s very useful. In my mind this is one of the reasons why the working class stay under invested throughout the bull runs and usually buy the top. They’re too scared to buy until the peak euphoria comes when is already too late.

However, one must not be complacent. We need to respect risk, we need to respect the market, we need to use stop losses. This is why they were invented. And this is why in Q4 I was warning you we could see a correction in the market. If you didn’t pay attention you could be down as much as 40% if you were invested in Apple or even more, if you were invested in some of the other stocks.

Could we see a 2008/1929 style crisis? Absolutely, but I don’t think this is the highest likelihood event. I still believe we’re in a secular bull market and that this is a cyclical correction only, but I’m staying open minded to any outcome. Like I’m opened to a scenario that the worst is over and that the market will start a process of forming higher highs and higher lows.

Here is a weekly chart of Global Dow ($GDOW).

We see that the price has corrected to 2015 highs or approximately 20%. It has also bounced from a rising trend-line and a 200 week simple moving average.

Very similar picture is in S&P 500 or some other stock indices. In SPX is also nice to see that we’ve seen a volume spike (capitulation?) during the holidays and that finally volatility index ($VIX) levels have spiked notably.

I am opened to a scenario that stocks are yet to form a bottom and we’ve seen nothing yet. But if some of these constructive signs evolve into a something bigger and better, then we must pay attention. Like we paid attention in October 2018. And these are a few of the stocks that are on my radar if the market does start turning higher.

Get in touch¬†if you’d like to discuss this topic in greater detail.

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