PheW! Or Should Be Worried about that "W"?
We do not purport to be a technical analysis service. But stare at the charts long enough and some patterns scream out loud. The dreaded "W" bottom or "double bottom" is one of those. Look back at any significant downturn, in over 90% of those events over the last 50 years a sustained recovery (defined by clearing the peak-to-trough-back to-previous peak formation, followed by a 15-20% gain over the next 15-20 months) the market has made a clearly visible W-bottom.
The dangerous part is where we are in this cycle right now. It is tempting to think the market's recovery back to early-April levels is giving us the all-clear (phew, shoudn't we all be singing Sam Cooke's classic "I Shall Be Released...oops...Liberated"?). Or are we tuned into the King Crimson dirge "Confusion...oops Liberation...will be my Epitaph"? What looks like a rather jagged, not a clean V, rebound on the charts (since Trump Capitulates On Tariffs Day) isn't really confirmed as a true recovery until we clear previous-peak Jan-Feb highs.
If that doesn't work, the likely path near-term is for another downward spike as the market struggles to etch its W. And, as previous bear markets have demonstrated, the real bottom before the ultimate W-recovery can be much further down. So help us, gawdd. But, hold on for a second, as April 9th proved, you can't afford to be out of the market as a long-term investor, even if you are trying to be careful!
So what is one to do? Stick to your TrueNorth of course, righten the ship and make incremental moves for their longer-term impact, with the help of FinDosh.
Till next week...
Note: This blog is for information purposes only for FinDosh clients. It does not constitute investment advice or financial planning services.
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