This was how I described the market as it swings its mood fast and swiftly. Back then I was talking about in weeks to months but nowadays, we are talking about in hours. Yes, you heard me right, in hours!🙄 Yesterday shortly after opening, I told my Family that I placed a naked call order for TQQQ, i.e. I was selling TQQQ calls outright without hedges. At the time, the market was still in green and TQQQ was still going up but I got the sense that the market mood was too euphoric and could change soon. Well, my timing couldn't be better. Nearly minutes later, the market started to fall.....And we continued to see heavy selloffs most of the time today. Then late in the afternoon today it seemed to me that the market mood was too depressing and it was poised to change. So I advised my Family that I covered my naked TQQQ calls for a quick nice overnight profit and I started to sell naked puts for TNA, betting on a quick rebound. Well it appears to be another perfect-timing call as TNA turned from red to green by closing. It is too early to call a victory yet but I'm confident in my call. So basically I swung with the market mood from euphoria to depression within 24 hours by playing my bets against its mood😜
Since the bottom of the housing crisis in 2008/2009, the market has enjoyed a fantastic bull run, which even the centurial crisis of the COVID pandemic cannot not stop! But we are seeing more and more evidence that this bull run has come to, or at least very close to, its top. To prepare you for the inevitable upcoming bear market, I will show you some strong evidence that often comes up during the market top formation. Here is one example: the cratering of the market's strong performers. I first warned about the potential faltering of ARKK back in Mar last year. After it fell 30% from its peak, I warned again that it could fall another 20%. Looking back now, it was certainly a spot-on warning as ARKK has lost 49% from its top! When the top runners cannot continue to run, it is an early warning sign that the trend may soon change its direction!😣
Before finishing, let me share one interesting note I got from my friend about market fools. I hope my friends won't be such fools.🤓Last September, Bank of America reported $1 trillion had flowed into global equities up to that date from the beginning of 2021. That was more than the previous 20 years of flows combined... Every last fool came out of the woodwork last year and went all-in on stocks.
They saw markets marching straight up for several years and eventually got tired of watching everyone else get rich. Last year, they finally deemed the well-established trend as safe enough to pour money into – somehow believing it would continue forever. So fools did what fools do... they put more money at risk last year than in the previous 20 years combined.
But here's the thing they don't realize...
After they've bet (not invested) every spare penny they have, there's nobody left to buy. A stock price can't keep soaring higher if no one out there is willing to pay that level. Pretty soon, many more shares are offered for sale at any given moment than are bid on to buy.
For now, though, the fools still have enough to keep the party going... JPMorgan Chase (JPM) analysts said that this past Monday was the third consecutive day when retail investors bought more than $1 billion worth of stocks.
Monday's $1.07 billion total retail buying put it in the 93rd-percentile of historical data. That means fools have only been more foolish 7% of the time... At this rate, they're a shoo-in to get a chapter (or two) in Lack's next book.
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