*Excerpt from the PART 1 (March 12th)
MY THOUGHTS
We are still dealing with the extremely negative fundamental data that has been pouring in continually since the Covid-19 pandemic started–seems to get worse everyday.
Despite of all that S&P 500 managed to recover more than 50% of it’s losses in just three weeks gaining +30% (since the lows) during that time. And this sets up with many mixed emotions from the traders/investors as they trying to navigate through this market.
It seems as, though, just about a month ago, market was raining down fire with -5% to -8% declines each day almost everyday; now, all of sudden, market is behaving as to everything is back to normal–talk about bipolar, right? I’ve been hearing much anguish, frustration and excitement all at the same time in the last several weeks.
I think the worst thing you can do is trying to predict short-term movements and therefore trying to profit from that. I know I am biased on this, as I am a long-term investor and a position trader (I don’t do short-term trading, ever). But I think it’s been a very difficult market for anyone who is trying to profit from the ‘retest of the lows’ that hasn’t come and the bears who has been shorting into the strengths in the last few weeks looking for that lower high that hasn’t come either.
Market usually fools the majority, when the majority consensus is looking for something, market usually won’t give it to them. And I think that’s why, psychological speaking, despite of the horrible fundamental data, market has been shooting up.
Even if the long-term investors liquidated their entire portfolio near the lows to preserve what they may have left fearing the worst, it has been very difficult market for them to jump back in, again, fearing that the market could roll over any moment here.
PRIMARY TREND
I depicted the five major indices ETF (all monthly charts) to observe the primary-trend perspective with you.
There are some mixed signals, because NASDAQ and Semiconductor have been holding up really well whereas the Russell tanked pretty hard.
- Russell is the weakest-link here as the index tanked more than -40% since the peak in late 2018
- The horizontal pivot barely has any elevation to it, it’s almost like it’s a flat line
- Compare to other indices, recent bounce has been weak, relatively speaking
- Dow also suffered a huge losses at one point, but it regained lot of it losses very quickly as you can see the long lower wick and the green candle for April
- Rising pivot and the rising support has a good elevation and holding so far as the value-buyers stepped in near the 200-level
- I still want to give benefit-of-the-doubt to the buyers in the primary term
- S&P always fit right in the middle of the bunch almost all of the time; not as strong as the NASDAQ but stronger than Dow and the Russell
- Very good elevation-angle on that uptrend support and the rising pivot–text book primary uptrend-supports
- Very strong monthly-candle right on that primary uptrend-supports piercing through the previous month’s bearish-candle
- Semiconductor is so strong that I can’t even draw the rising-pivot, only the rising uptrend-support with lofty angle there
- Can you imagine that this index has gained more than +36% in less than one month (since the March lows)
- Rising uptrend-support held and bounced, and also, horizontal-pivot (red box) held and bounced with a strong bullish-candle for April
- Intel (INTC: Semiconductor) is currently the largest holdings in my portfolio, and it’s been a great opportunity for me to acquire more shares in this downturn
- NASDAQ is always the leader out of them all, and this time is no different
- Do you see the rising pivot that connected the lows in 2019? Similar could happen for S&P for this year
- Uptrend support held and bounced and the horizontal-pivot held with a monthly-engulfing candle
- This is by far the strongest monthly candle out of all the indices we’ve scrutinized today in this post
- Can you imagine that NASDAQ is only 10% away from the ATH
FINAL THOUGHTS
I read the tape (technical / price-action analysis) and I do NOT let the mainstream media to impute fear and distort my judgments when it comes to my investments in the market.
You can argue all day why the market “shouldn’t be” pumping higher with such a horrible fundamentals, but the reality is, it is going higher. So, at the end of the day, only thing matter is how you can profit from this market.
The plunge in March was difficult, but I held all of my longs through it as I’ve been also acquiring stocks aggressively in the last two-three weeks. Perhaps, it’s the dichotomy of investing; it was painful to see so many of my stocks getting hammered but, at the same time, I was so happy to see that so many stocks were on clearance!
My long-term outlook in the market remains the same today as it was before the plunge.
I believe the market will shake this off much sooner than most people think and will thrive once again, but I think, this time around, it’s going to be much stronger than ever before once we recover from this.
-Kay
BONUS CHART: 1987 vs 2020
You guys remember this chart of Dow Jones that I shared on my Twitter (@2kaykim) and talked about on one of the videos in late March. Well, when there is chaos in the market, there is always someone who gets rich from that as the market rewards the risk-takers and punishes the chasers.
If you are a long-term investor in this market for the next 10+ years, I think this is the level you want to acquire/accumulate stocks which is what I’ve been doing and will continue to do this entire year.
Watch My Long-Term Analysis Video
