WHAT IS GOING ON
Market has progressed quiet well since the massacre we’ve witnessed back in March due to the Covid pandemic.
But, now, looking back, I think many are realizing that it might have been one of the best buying-opportunity this market has ever produced (see “Generational Buying Opportunity Here” and “Is This The End of The Bull Market“).
The biggest question traders and investors are asking now is, can this market continue to perform well in the next year?
Well, it’s a valid question, because S&P 500 is up more than 70% since the March lows and NADAQ is up more than 80% since the March lows. And, surprise, surprise, Russell 2000 (the Small-Caps) are actually up close to 110% since the March lows; not to mention so many tech stocks sky rocketed this year with crazy valuations.
HOW WE SHOULD TAKE IT
However, what you think the market SHOULD do is not important and market do not care.
What we have to understand is, what is this market going to do next and how are we going to benefit from it which is the only valid question; NOT, what it should or shouldn’t be doing or it’s impossibility.
History tells us that market is well-capable of doing the unthinkable especially when most people think it’s can’t be done.
I still remember when SPY was trading at 180s in early 2016 and many were concerned about how this market was ‘up too much’, guess what, we are at 370 now.
POSSIBLE OUTCOME
Here are my reasons why I believe that the market will have a strong year in 2021 and beyond:
- We are in a primary term uptrend
- We witnessed sharp and expedited contraction in March, but we were never in a true bear market (I emphasized on this in the video back in late March)
- Market likes to consolidate for a year or two before making its run again (we are talking in a primary term ‘big picture’)
- After market bottomed in 2009 (after a true bear market), market had a strong 3-year rally (from 2009 to 2011)
- Market consolidated from 2011 to 2013 (2-year consolidation) before it took off again and had a strong 2-year rally (from 2013-2015)
- Mark consolidated from 2015 to 2016 (About year and half consolidation) before it took off again and had a strong 1 year and 3 months rally (from 2016 – 2018)
- I believe the market is just finishing up with it’s consolidation from 2018 to 2020 (3 full years of consolidation, the longest one yet on this primary trend)
- I believe we are now in the process of taking off again to have a strong bull rally (possibly for the next 2 years)
RIDING THE PRIMARY RALLIES
It’s a monthly chart you see above, take a look at the highlighted areas.
It seems, looking at the monthly chart (each candle represents one month worth of data), smooth move up, right? No, there were so many shenanigans and gap downs and volatilities through out the month in each months. How many people do you think calling the ‘top’ on any given day every time we see a correction?
If you wish to ride the prolonged rallies like the highlighted areas you see on the above chart, you must learn to have patience and understand long-term picture/trend of the market; and not to come to a dramatic conclusion when you are faced with the volatilities even if it seems fierce in that moment.
Trust me, each month, there were some big red days even on the month what seem to be a smooth bullish month (highlighted); and there were many top-callers including the “experts” on TV through out the primary rallies.
It’s never easy and the market was designed to leave and fool the majority at all times.
*Make no mistake, there will be furious down turns along the way that will make anyone extremely fearful of the market.
