Is the Bear going back into it's den?

Tuesday, Feb 19 2019 by
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We are as a I write in a critical phase of this market. Is it the end of the Bear or just a correction? I owe it to those who have read my last piece The Real Truth about Bear Markets to set out my current thinking. I am in doubt again as we are at a turning point todays date is 19th Feb 2019. The Dow has retraced 75% of the fall and 27 of the last 36 trading days have been positive, that’s a very strong rally. As for the UK we have problems of our own weighing on the market, but they are well known. So has the trade war subsided, has anything changed since the collapse that started last October? The FTSE and 250 have retraced 50% of the fall but the 200DMA’s are still pointing SE and volume is average. I would say it all depends upon the Dow if that turns and it needs to turn now then the Bear is still in play, however if it breaks the all time high on good volume, I have got it wrong. Gold is looking good and Palladium has taken a leaf out of Minervini’ s book but I am too scared to act, or as they say will wait for the minor correction prior to investing. It is up 200% on this wave.

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3 Posts on this Thread show/hide all

JohnEustace 19th Feb 1 of 3

Palladium has its own drivers and I wouldn’t read across from that to the wider market.
Palladium demand for catalytic converters is up due to the switch from diesel to petrol car engines and tighter vehicle emissions standards in China.
But palladium is only found in small quantities alongside platinum so supply is inelastic.
The other side of the coin is that platinum prices are weak.

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Jack Corsellis 19th Feb 2 of 3

My reading is that the US and China will agree a Trade Deal soon. Trump can't afford not to even if it isn't a very good one. He's got an election to win and can't be focusing on 'little old China'. When the Trade Deal is announce the market will rally higher and he can shout from the roof tops how great he is. Longer term though I think global growth is slowing, including the US, and we'll enter a recession in 2020.

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mmarkkj777 19th Feb 3 of 3
5

Personally, I think it’s very, very difficult (impossible?), to predict full blown bear markets and crashes, simply because if they were easily predictable, they wouldn’t happen, because they usually happen when most people are most bullish. I’ve lived through several and been hit, to a greater or lesser extent each time ( the first I experienced as an investor was in 1987). I think it’s a good idea to be aware that it can and will happen ( and it’s certainly overdue by normal phasing). But we had a couple of corrections last year which may have tempered the multiples somewhat. The problem is we don’t know when and there are great opportunities to pick up good companies at a good prices and it’s all so easy to get over-exposed.

Stating the obvious, I know, But best to take opportunities where they materialise, but have a risk strategy, whether that’s keeping cash, stops, to take you out of a downturn, defensive stocks, or a combination of all three.

It still feels quite risky out there at the moment.


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