Monday, February 22, 2021

Stock Market Overview -- "Stormy" Markets Coming


"Stormy" Markets Coming....
There is a prevailing theory, among Wall Street analysts, is that the economy and markets are going to do really well over the next couple of years, because everyone is going to get vaccinated, the lockdowns will end, everyone goes back to work, the economy prospers, and everything will go “back to normal.“

Predictions about the future of the markets and the economy, based on fundamental analysis, are usually wrong — a major reason why our Private Account Wealth Management Services are based on proprietary technical analysis as well as evaluating levels of greed and fear. 

What is concerning us right now is that we are seeing massive optimism, over confidence in the global markets, and a super bullish rally in the various markets, producing extreme levels of “greed.“

These would be classified as contrary indicators, which are showing excessive optimism, greed, and speculative activity in the various markets.

Rampant speculation is also occurring in the markets, with the Gamestop stock being a perfect example, which caused a $20 billion loss for hedge funds as they were forced to cover their speculative short positions -- selling the stock in the hopes that the price would decline, to buy it back at a lower price, instead buying it at a higher price for a huge loss.

This rampant speculation, over optimism, and confidence has spread through all of the global markets, as illustrated in various social media platforms.

We typically see a bearish reversal or major correction in the coming weeks, when the sentiment of the dumb and/or herd-following money is this confident and optimistic.

A significant correction is overdue in the global markets, due to the severe level of investor complacency, which would quickly reverse all the gains of last year, and possibly much more.

We also think that the pundits could be quite wrong that the economy could quickly recover, with everyone being vaccinated, because some medical experts are saying that it is possible that we may not be free of this coronavirus, as we’ve already seen it mutate several times.

We have already seen several new mutations from South Africa, England, and South America, which are much deadlier than the current version.

Medical experts are stating that not just the rich countries, but the poor ones as well, would all have to be vaccinated quickly, to create some type of herd immunity globally, before an additional new variants appears that requires a completely newly designed vaccine.

The real question is what happens when we have a new variant to this virus, as it continues to mutate, in which we are unable to develop a new vaccine — forcing scientist to go back to square one, and starting all over again with a new vaccine for a new virus.

Such an occurrence would cause a massive and detrimental impact on the global economies, with continued lockdowns, business closures, and surging unemployment.

Therefore, anyone that uses fundamental analysis to project future results are usually on the wrong side, a major reason why most economists end up being wrong over the long term for the markets and the economy.

An economist analysis is derived on the past, not the future information, which is just like driving a car, based on what is happening behind you, through your rearview mirror, resulting in an accident.

This is predominantly what is being used by Wall Street and the media — using data of the present and the past, to project the future — where as technical analysis is much more accurate in projecting future market movements.

In summary, this investor exuberance, over optimism, and excessive level of confidence will result in either a major trend change or correction in the near future.

Observation: There are only 2,250 billionaires in the world, even with a global population of 7 billion, because they are some of the few willing to delegate and make financial changes beforehand, instead of waiting until after-the-fact.

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The stock market information discuss has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. The stock market overview was issued for informational purposes, and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This overview is based on information obtained from sources believed to be reliable, but are not guaranteed to be accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in this stock market overview. Recipients should not regard this overview as a substitute for the exercise of their own judgment. Any options or opinions expressed in this stock market overview is subject to change without any notice and Wavetech Enterprises, LLC is not under any obligation to update or keep current the information contained within. Past performance is not necessarily indicative of future  results. Wavetech Enterprises, LLC and its stock market overview accept no liability for any loss or damage of any kind arising out of the use of any or all parts of this information.

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