Dow Carnage – It begins!
...and so the dead cat bounced and then continued it's fall. Looking at the the Dow Jones this evening it looks like the big fall that I was expecting has begun.
As we entered 2018 it looked like all of the major stock markets were unstoppable, but in a comment to maneco64 I noted that the exponential nature and almost vertical angle of the S&P 500 was looking very much like a blow off top. What do you know, within a couple of weeks the market had fallen, although the mainstream media weren't yet calling it a crash. As is usual with a blow off top, what you will see is a dead cat bounce, as bargain hunters rush back into the market in the expectation that the exponential move is not yet done, followed by a major crash, usually supported by deteriorating fundamental news. Interestingly this time around the news is light, which leads me to believe that there are major issues behind the scenes and the insiders are selling big time. The news will emerge in time.
For now it looks like the dead cat bounce is done and the big crash in the markets is just getting started.
Might we see another bounce? Possibly, but the weakness in the market has revealed itself now and most bargain hunters will be awakening in a cold sweat. There are no bargains to be had and we may have a lot further to fall.
Gold and silver are hanging on in there, which suggests to me that when the next big crash occurs we won't necessarily see a similar situation to 2008/9 when gold and silver crashed along with other major markets. Investors on the sidelines hoping to take advantage of lower gold prices will likely be disappointed, as the next move up in the metals won't be telegraphed, at least not by a fall first and then a big rise. The stealth bull market is already under way as sophisticated investors move into safe havens on the quiet. In the next market crash I would expect to see the metals fly as it is now widely known that the dollar is also facing hard times. Where else will safe haven money go during a crisis? Where it always has gone, and I don't mean cryptos.
For disclosure, I'm not a professional advisor and this is not investment advice, merely my own observations of the market and indexes, so do your own research.