Make Kitco Your Homepage

Yet another bubble and crash article

Commentaries & Views

If I see another article calling this market a bubble, or that the crash is coming, or claiming that "the party is over," I am seriously going to scream. But, I guess we should thank all these article writers as they are adding bricks to the wall of worry that we will climb in 2021.

I mean, have you ever seen a crash when everyone, and their mother, grandmother, uncle, aunt, and aunt's cat knew it was coming? In fact, I got calls from many of my relatives asking me whether they should get out of the market since all they are hearing is that we are going to get a repeat of the March 2020 crash.

As an individual investor, you are undoubtedly bombarded by information throughout the internet. While some of it is bullish and most are normally bearish (as bearishness seems to sell better), it is quite a challenge to be able to distinguish the wheat from the chaff. Unfortunately, the great majority of the information resides within the chaff, and often causes investors to focus upon their fear more so than profitable information.

To this end, we began Elloittwavetrader a little over 9 years ago to help investors learn to distinguish between subjective perspectives and objective analysis of the markets we trade. Then a little over 3 years ago, we opened The Market Pinball Wizard on Seeking Alpha, and we immediately rocketed up to become the top 2nd or 3rd service out of 180+ services, even though we focus on Elliott Wave analysis. And, based upon the feedback we have proudly received from our members throughout the years, we have substantially succeeded in assisting our members to maintain on the profitable side of the market the great majority of the time.

In fact, during our last 9 years, we have grown to a total of 7000 members, and almost 1000 money manager clients. And, one of our money manager clients sent us this note within the last couple of days:

"My AUM has grown exponentially because of you and I can't thank you enough. My biggest regret is not signing up sooner! You've done more good than you will ever know."

This same money manager posted a discussion he was having with one of his clients this past week. The client was asking him if this is going to become a crash like last year for which everyone now seems to be preparing:

Client: Is the market imploding?

Me: It's a C wave.

Client: But what about interest rates?

Me: It's a C wave.

Client: But what about the upcoming jobs report?

Me: It's a C wave.

Client: But what about China invading Taiwan?

Me: It's a C wave.

Client: But what about the senate holding up confirmations?

Me: It's a C wave.

Client: Wait, what's a C wave?

Me: Wait, China invaded Taiwan!?

Client: Just wanted to make sure you're listening, now what the hell is a C wave!?

And, if you also want to know what the hell a c-wave is, I penned this 6-part series of articles outlining our methodology from theoretical and practical application perspectives.

Each day presents us with new challenges, and further tests us between buying into the predominant stories told throughout the financial media and the objective truth presented to us through price. After all, price is the absolute truth in the market. Yet, the undeniable lure of the predominant media narratives seems to have greater sway and impact, and often misdirect us toward the wrong paths.

In fact, if you remember how bullish everyone was one year ago as we were striking the highs. Yet, we remained quite bearish of the EEM to the point that I began shorting it in February of 2020. However, I was certainly scratching my head as to what the SPX was doing while EEM and IWM were still presenting quite bearishly. Moreover, my target for the short trade from the 45 region on EEM was in the 31 region (the a=c target presented on the attached charts below). And, as we now know, EEM not only struck my target, but slightly exceeded it by 1 point.

Even back in 2018, I was outlining to our members that the ideal target for the SPX for its respective 4th wave pullback was 2200SPX. And, when we finally were approaching that target in March of 2020, the mass fear driven by the media misdirected many investors to not only sell their positions when we were down there, but even had most looking much, much lower.

Yet, those that were following our work at the time knew quite clearly that I was not only buying down there, but I even noted in our trading room that I instructed my wife to put the cash we had in our children's 529 plans back into the market, to which you can only make changes twice a year. In fact, the media-directed fear was so palpable, that not only did many of our members question the prudence of my buying back into the market, my wife even asked me "are you sure!?"

So, as I currently peruse the general media offerings as I write this update, it is hard for even me to remain unswayed by their lure of bearishness. Titles of articles being printed today include words like "bubble" and "crash," which elicit fear in even the most objective of investors. That is why I strongly urge many of our subscribers to tune out the news and stop reading the false media perspectives, and to focus on the more truthful perspectives presented by price action.

If you have read my last few public articles on Seeking Alpha, you know that I am quite bullish for 2021. However, I have been waiting for a very specific market setup which will launch us to the 4300SPX region later this year. And, last week, I noted that if we are not going to get that set up soon, then the market may provide us with more of a pullback before we begin that rally.

Then, this past Tuesday morning near the market open, as the market was hovering around 3900SPX, I sent out an alert to our members letting them know that I did not like the structure being presented to us in the market, and that it was a good time to buy protection for a potential test of support below us. And, as we now know, the next day the market began to decline from the 3900 region to almost 3700SPX.

Overall, my perspective remains unchanged. Support in the market now resides between 3500-3675SPX. As long as the market maintains that support, I am still looking for that break-out setup that will launch us to the 4300SPX region as our next target for 2021. If you would like more detail on our expectations, you can feel free to join us for a free trial at ElliottWaveTrader.net, as I posted a 3-page update on the market this past Saturday night. As one of our members told us on Friday: "I cannot stress enough how much this site not only changed my entire approach to investing, but my life as well. Game-changer is an understatement."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.