How to survive the coming apocalypse without booze…..An investors guide.
If you’re looking at the market and consumer sentiment at all you’re probably holding up in a bunker waiting for the market apocalypse to end. A few weeks back it looked like we were going to survive the freefall and get some relief but yesterday triggered a break downwards from the consolidation pattern that has been dragging on for the past 10 days.
This is the chart that made me want to open a bottle of wine wayyyyyy before it was acceptable yesterday.
That big scary red candlestick on the right……definitely booze worthy for my long equities. Then so far this morning my support line (that dotted orange line in the chart above) was abruptly broken and although we are currently in another consolidation, I do not suspect it’s going to break upward for long.
This leaves me wondering….how am I going to spend my weekend? Cocooned in a blanket, wine in hand, charts in other and pondering how long this downward spiral will last? Or take my own advice, don’t stress out, and find a better way to increase my dopamine knowing that the market always reverts to the mean eventually?
Obviously it’s the latter no matter how enticing booze might be to numb my poor long equity soul. Fortunately I have a great short on so I am offsetting portfolio losses but not everyone has this investing opportunity. So what is the average investor to do?
The quick answer would be to put some money in an inverse ETF like SQQQ (to short the Nasdaq)or SDS (to short the S&P) and try to offset some losses while the apocalypse rages on. I suspect the market is heading for 3400 on the S&P next week given it’s Fed week, the big one, the ‘annual economic forecast’.
My hope is that it will be the Big Washout everyone has been waiting for where the last of the holdouts sell off and we see a significant breadth thrust and buying pressure to reset the market.
My fear is that we punch right through that 3400 support and the market keeps on sliding. Great for my short, horrible for long equities.
I’m more concerned that this Bear market is going to hang around a lot longer than we anticipated. In which case staying in cash as much as possible to really let a bottom form might be the best opportunity out there. Two years ago investors were given a ‘once in a lifetime’ opportunity to buy the dip….maybe we can look at the apocalypse from that angle? A second ‘once in a lifetime’ buying opportunity? Gee I feel so lucky to get to experience this twice in my lifetime.
Some good news…not necessarily in the short term but for those who are in it for the long game….
According to Forbes Magazine, “in more than half of the 14 bear markets since 1945, the S&P 500 hit a low point within two months of initially falling below the 20% threshold — and forward returns were largely positive, Bespoke points out, with the index rising an average of 7% and nearly 18%, respectively, over 6- and 12-month periods”.
With this insight in hand, maybe just one bottle of wine then? Surely the current trade action is worth that? Hang on to your hats! Don’t panic, don’t sell if you haven't already and don't get too drunk this weekend;) History demonstrates that this too shall pass:) Happy Friday everyone!
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