Snares of Market Predictions


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US market has just posted the best weeks for the month since  March 2016 particularly true for S&P 500 index. It has crashed those who have left market earlier but rewarded those who bet from bottom fishing. However, no one can be certain whether this surge set up a bull trapped or real bull run up revival. When the underlying risks such as Government partial shutdown, yet to settle trade war between US and China, remind cautious investors that this run up is possibly not real. It could be a false hope of the trade war settlement between the two greatest economies.

US markets posed the best month performance since March 2016

Value investor will laugh at those who chase after the swing of stock market mood. In fact, it is very true that chasing after short term market move is a futile effort. And yet it does not deter investors from doing that. Because there are views that markets have come down attractively cheap. While they consider the existing strong US economy, this is the best opportunity provided for them to jump in.

Predicament of Sideliners

This is the moment of regret for those who left earlier, they are now feeling left out, thinking they are missing out the best harvesting time. On the other hand, market surges so fast and so high that it is not advisable to enter at this juncture. Whoever wishes to join the wagon, has to wait for the technical pull back. This has also another problem. Market does not necessarily provide a technical bull back to take up those miserable orphanages, however.   

The greatest fear for investors right now is the false break out, they would possibly be trapped later if they rush into the market. This is technically called a bull trap. However, if you don’t enter now, they fear that market will continue to grow higher, you will encounter regret where we call it missing an opportune cost.  

News analysts said markets currently are positive based on the hope of a deal between US and China that’s the major reason why securities have run up substantially. It is up to investors to decide or guess how true will this development be.

The partial government shutdown will also pose another challenge to the market move. It looks like Trump is stubbornly strong, insisting the budget for building the border wall. This again will affect his reelection in the near future. There seems will be no imminent solution to this standoff. However, at this moment, investors shrugged off such threat to US economy. But if the standoff remains longer, we are not sure how will the market react eventually. So far, the duration of standoff this time has already been record making.  

Duration of Government shutdown this time has made record

Critical Decision

By next week, some major corporation will be reporting their earnings profit. Positive earnings reports will again push market to higher ground.  Any unexpected earning or any major earnings fall short of expectation, market will once again enter another spectacular rollercoaster ride.  

Think of it again, what will actually for you to miss if you remain at the sideline? You will miss out substantial profit. Perhaps this will be the last run up of the market before it finally went into decadal bear market before the end of 2019 or 2020. But you will miss out the deadly black swan too. However, what is the fear if you enter market right now? It is the fear of the bull trap. Do you have a chance to come in only after you see a clearer horizon? Will it be the moment after trade war settlement between China and US, and government shutdown has been settled? The answer is of course yes, but market would have already flown half way to the sky.  

Any move is actually up to individual investor to decide. Each investor has different rate of risk tolerate. As long as we learn to know our weaknesses and strengths in market investing, we are better off when the time comes.

Trade and invest safely!

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RISK WARNINGS

The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions.  This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to make up individual investment decision.

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