Before we get into any commentary take a look at the images and charts below. Remember that the best time to buy from a long term perspective is when blood is flowing freely in the streets and blood is flowing now. Finally, keep in mind that we have always advocated that crashes are nothing but long term buying opportunities. Pull up a long term chart and you will be forced to arrive at the same conclusion. The Big player’s game strategy is to get individuals to focus on words such as bear market, crash, and end of the world, etc.; in doing so, the crowd focuses on the tree and forgets the forest.
The anxiety gauge has redlined, and the gauge is in unchartered territory; it has set an all-time new high. Bearish sentiment is approaching the seven-year high level. Fear and hysteria are trading at off the chart levels. Mass psychology states that stock markets never crash when the masses are in a state of panic. Bull markets emerge when the masses panic, so forgot about the what happens if the stock market crashes scenario? If it does crash, run out and buy all the top companies; from a long term perspective stock market crashes are fantastic buying opportunities.
The correction of 2008 was warranted as the masses were euphoric in terms of the housing sector; it took a turn for the worse when Lehman brothers were purposely thrown to the curb by the Fed. Regardless of this development, you can see that the markets were trading in the extremely overbought ranges and masses were euphoric.
The same sequence of events occurred during the dot.com bubble and the not too late Bitcoin bubble. If there were charts, we could demonstrate the exact setup going back all the way to the tulip bubble. The masses are not euphoric and the markets are not overbought; hence the current pullback most likely falls into the “opportunity” category