2019 Is New 2008?
Just like 2016, you are now bombarded with “2019 Market Crash” scenarios.
And all these social media “experts” coming up with ideas that 2019 is somehow similar to 2008 fearing the worst.
Trust me, they do this every year on every pullback, and these social media “experts” pretending like they know everything when market is moving higher but always squirming with fear as soon as market turns the other way.
2019 is not 2008 as 2016 was not 2008; couple years later they will say 2021 is 2008. They will be keep asking questions while the market continues to march higher.
Why Hundreds Hedge Funds Closed in 2018
I’ve been hearing much about how hundreds hedge funds have closed its doors as of end of 2018, and I think I know exactly why.
Most of hedge funds were very bearish in 2015-2016 anticipating and positioning themselves for a massive global market meltdown.
When you are preparing for a bear market especially if you are so convinced and fixated on the idea of why it should, its very difficult to all of sudden completely change your thesis when the market goes completely against you.
Well, after few years later, after 60% gain on the S&P 500 and 100% gain on the NASDAQ (to put this in perspective, they were waiting for 35-55% crash while the market went up 60%), they thought that for sure 2018 would be the year for the bear market to begin.
Well, we did see 12% corrections on the S&P in the early 2018, but to their disappointment market went back up to print new all-time highs in September of 2018.
But here is what really happened.
I believe sometime between July – September of 2018 many of the hedge funds finally changed their thesis on the market and went full-blown bullish to make up for their loss.
Well, as you heard me saying it over and over again, you start chasing, market is very delighted to punish you.
Like a domino effect, all these hedge funds start to be in a massive panic and liquidating forcing the market to correct in a such a rapid manner.
Why the Fast Correction
This is probably the main psychological reasons of why we did see such a fast 20% corrections in the market last three months.
Not only the hedge funds were chasing the market in the late summer of 2018, but most market participants who were bearish all throughout the year in 2016-2018 finally changed their views and chased the market in the late 2018.
Also, even the cash people who went cash in 2016 they probably patiently seated out not chasing the market in 2017-2018. But when they saw a correction in early 2018 and market bounced back up, they couldn’t wait any longer for a crash.
They finally decided to go long in late summer of 2018 for fear-of-missing-out on another rally like 2017.
Very, very bad idea.
Like a domino effect, market was punishing all of them at once; most market participants and the hedge funds haven’t made money in the last three years.
And when they finally ready to go long, market comes behind them and knock them out cold for good.
Brutal? Yes.
This is the animal you are dealing with, it can sense your fear and your little so-called “smart” way of thinking from miles away and ready to knock you out.
4000 Target Price
I love it when I feel like I am against the world, because that’s exactly how I felt when I was bullish in early 2016.
Today, I finally feel like that again, me against the world while everyone else is trembling with fear.
Above chart is S&P 500 index (weekly) from 2010 to present time.
My oscillator and the moving average (circles) showing the extreme oversold level here similar to 2011 and 2016.
With that and with all of my other researches, I have reasons to believe that we are going to 4000 on the S&P 500 within 2-3 years.
I intend to ride this all the way up from here to 4000.
