"Come to the edge," He said. They said, "We are afraid. "Come to the edge," He said. They came. He pushed them, and they flew. ~ Guillaume Apollinaire
In early October when the pollsters were all busy proclaiming that Hilary was going to win, we stated in an article titled Mass Psychology states Trump win Equals stock market buying opportunity that from a financial perspective a Trump win would present an excellent opportunity for the astute investor. We had made the same comments before Brexit became a reality, and it has been our theme that as long as the trend is up, all sharp pullbacks should be seen through a bullish lens. In other words the more substantial the deviation, the better the opportunity. Here is a small excerpt from the above-stated article:
Regardless of what you think of Trump, he is having the same effect as Brexit had on the markets but in smaller doses. If he should win the election, then the reaction will be several magnitudes larger. When the poll results came in stating that Hillary fared better in the 1st debates the markets responded positively and recouped their losses; this reinforces our argument of several years that says substantial pullbacks should be viewed as buying opportunities.
From a contrarian angle (and not a political point of view) a Trump win could be construed as a positive development; non-contrarians will demand to know why? Mass Psychology clearly states that the masses are always on the wrong side of the equation. A Trump win will create uncertainty, and the lemmings will flee for the exits; markets will pull back sharply and viola the same old cycle will come into play. The cycle of selling based on fear which equates to opportunity for those who refuse to allow their emotions to do the talking.
It turns out that the naysayers and doctors of doom sang the same old miserable song and instead of walking away with bags of cash, they were once again handed their heads on a platter. The action was fast and furious. The markets crashed, the dollar nose-dived, Gold took off, and oil dropped. It looked like hell was about to be unleashed, and then the markets reversed, and the momentary feeling of satisfaction the naysayers had was shattered. They were speechless as the markets not only recouped their losses but soared upwards; the action continues today; a clear validation of what we have been stating all along, that most of the advice coming from these so-called experts is on par with rubbish. The plot is always the same; scare the hell out of the masses and make it look like the world is going to end. Then trigger a strong reaction, and when the Crowd thinks the bottom is about to fall out, the smart money comes in and say's "thank you lemmings for giving us another free meal."
Take a look at the headlines before Trump was declared the winner
If Trump is elected president, it would be 'exceedingly harmful' to markets
The stock market could crash if Donald Trump is elected president
Economists: A Trump win would tank the markets
President Trump May Be Bad For Markets - Forbes
Mark Cuban Predicts a Stock Market Crash if Trump Wins
When we saw all this hype and nonsense being sold as news, we quickly fired an update to our subscribers stating the following:
This is Pavlovian programming at its best; the signal instead of a bell is a Trump win would be a disaster for the markets; the same signal was used to trigger the sell off after the vote for Brexit came in. It is a brilliant strategy, and it works all the time. Don't fall for this nonsense. We do not know who will win, but what we do know is that the top players are going to do everything in their power to trigger a significant reaction. In the end, all they care about is the reaction, and they will use whatever is necessary to trigger such a response. It is a game to them, to watch the masses stampede or turn euphoric. They trigger a reaction in both directions; hence always trade with a relaxed mind. ~ Market Update Nov 2, 2016
This brilliant and evil strategy has been employed for generations and probably predates the Tulip mania. The idea is to create a feeding frenzy or a stampede; in other words, the crowd always leaps and then looks. The crowd has been on the wrong side of this bull market since its inception, and that is why it is famously referred to as the most hated bull market in history. While the naysayers keep blabbering about how the next correction is going to be the big one; they forget that each pullback leads to a higher low and that when the market does pull back it is always trading above the targets they issued a few months or years ago. How do you think the naysayers from 2011, 2012 or even 2014 are feeling? If they held onto their short positions, they would have bankrupted themselves several times over. Thus it stands to reason that most of these guys are all bark and no bite. In other words, they talk but rarely act for if they did, they would be dead broke by now.
Instead of crashing the Dow is on its way to put in a series of new highs. There is a strong wall of support in the 17900-1800 ranges. Eventually, this support is going to move upwards, and 18200 should become the new floor. The Dow needs to trade above 18650 on a weekly basis, if it can achieve this, then19K could happen within the next 4-8 weeks.