7 “WHAT-IF?” SCENARIOS DANCING AROUND MY HEAD
Needless to say, the past couple weeks events and the accompanying price action in the financial markets has resulted in a dramatic change of heart in my investment bias going forward. As an aggressive investor/trader in the markets, I have become accustomed to being able to put my ego and opinions aside. It's a fundamental requirement of being able to survive in this game. You must be capable of completely flipping the script should the right set of circumstances come into play, as they have recently.
95% of what I know I share on this website and the various other websites that I contribute to. The other 5% is reserved for my eyes only. I have a couple of proprietary indicators that are somewhat unique. I haven't seen them shared in any other forum. Most importantly, they seem to work very well for determining long-term turning points in the markets. One of them turned bearish this past week for the first time since January of 2008. The other is on the verge. I'm sure I'll share them in time. Right now isn't that time, however.
There are a lot of "what if" scenarios that I have been going over in my mind. Here are some to consider:
What if the rally we experienced since the 2009 lows was simply a standard retracement of the initial leg down within a multi-year bear market?
What if we are in a period in time where range expansions become the norm? What I mean by that is what if all the normalized ranges of highs and lows on every indicator, gauge and expectation you have for market volatility going forward are undergoing a dramatic shift towards expansion?
What if the market wants to force the hand of the Fed into decisive monetary stimulus?
What if the market wants to force the hand of government to face up to the myriad of problems that we are currently facing?
What if the unprecedented volatility of this week is a warning signal that the markets are unstable?
What if a major European or US bank go under? Will the system be able to absorb such an event?
Why does EVERYBODY see this as a buying opportunity, Donald Trump included?
I wouldn't be asking such questions if the market wasn't worrying right along with me. The global markets are telling a story here. The dramatic volatility is a reflection of sudden and intense discomfort.
I hate to be a bear. What I hate more, however, is being eaten alive by bear markets. They are relentless. They will take whatever long strategy you have, chop it in half and dance around it while throwing stones at the remains.
This weekend I'll be posting a number of charts to illustrate the bearish case for the markets further. I will also be putting together a list of potential short candidates and inverse ETFs to consider.
