Sparta Report

What 4 Word Sentence Foretells Every Market Crash?

"This time is different."

The most striking thing in everyday life is how thoroughly conditioned the bulk of people are by mass media. While Pavlov and B.F. Skinner laid the ground work, the technical details of how to control the behavior of the masses was begun in earnest during the Great Depression and continues on to this day. The secret of President Trump’s success is his ability to get millions of people to stop and think via his unconventional messaging.

Here is the entirety of the message I am trying to convey to President Trump’s supporters:

If you have a 401k/IRA with money centered in stocks and bonds, it is now time to book your profits by switching to a money market fund in the near term.

Everything which follows after this statement is documentation from multiple sources to support that action: Book your retirement profits.

Research and experience show 90% of the people who read this whole article will NOT act as advised due to conditioning.

If you’ve commented on a markets post here with a BTFD response, this article is not intended for you. You are contra-arguing the answer isn’t to take profits but to extend risk after a reasonable reward is in hand. Your comments will not receive a response.

The chart attached in this next tweet was sent out as part of a tweet by @NorthmanTrader on January 6, 2018.

It would be hard to get any more different than what you are seeing on the far right hand side of this chart. The pricing of the $DJIA through January 24, 2018 remained above the upper Bollinger Band. If you want to understand the technical use of these bands, please Google them. If you want to understand how unusual it is for this to happen:

A 5 year old child towing a floating adult elephant about like a helium balloon would be far less amazing.

Even in brief form, Eric’s observation is, like many things market related, obtuse. Simpler version?

Never in the entire history of the markets has the pricing of an entire market index stayed above the upper Bollinger Band for an entire quarter. Never.

If you click on the link at the bottom of the tweet above, it will take you to a multi-part explanation of how the Fed screwed everyone in March 2009. Short answer: Yes, the Fed is perfectly happy to cause the next financial crisis as part of getting rid of their balance sheet problem.

In the tweet below, I again provide the link to Eric’s post and recommend reading it. If nothing else learn what a “reconnect” means.

If you clicked over to Eric’s article and you don’t have a minor in market technical analysis, you’re eyes may be glazed over. Don’t worry, we’ll sort it out.

Don’t worry about what RSI means, the take-away is where hitting a value of 20 in 2008 was an extreme people noticed, hitting an RSI more than 4 times larger in 2018 is something they didn’t notice. Like you failing to notice the floating elephant starting to singing show tunes.

We are now in February. The technical analysis after last Thursday is the most likely point for the $DJIA to stop falling is after it drops another 3,600+ points.

But it could be another 5,300 points lower from where it closed on Friday.

Hopefully you are thinking in very personal terms right now. Will you be happy if the Dow drops back to where it closed on Election Day 2016?

If the answer is “No” what should you do first thing on Monday morning?

I’ve included this last tweet just to make it easy for people to refresh themselves about the Monty Hall Problem