A few days ago Ameritrade released what they called their“Ameritrade Index“, which is a monthly analysis of what all of their clients are doing in their accounts for the previous month.
Despite the wild swings in the market and recent drop down to the 200-day moving average Ameritrade clients in aggregate where net buyers last month trying to game a bottom or play for another rally.
Really everyone is bullish right now. I don’t know anyone who is net short betting on a drop and almost all “bears” are predicting a big rally this summer first before a fall crash.
It seems to me that people are either feeling confused by the stock market swings or are becoming desparetely bullish.
The confusion is coming from the fact that the market is swinging wildly almost every day and the media is linking each move to a news story. People are trying to match news to market moves when they need to focus on the charts for clarity. The news is being exaggerated. For instance Xi is not caving into Trump and we are on the verge of World War III today over Syria.
As for Ameritraders their top buys were AMZN, NFLX, and GE. They were net sellers though in FB following it’s big drop.
This gives us a good idea how the masses are feeling about the market and it shows that they have no fear at all.
They are what I call desperately bullish.
At the same time margin debt hit a record high last quarter and has barely come off of it’s highs. So there has been no panic among those using margin and leverage to gamble their accounts up.
There is no real fear in the market yet despite the swings.
The technical analysis charts though that everyone looks at shows the obvious and that is that the stock market is trying to hold it’s 200-day moving average and everyone knows that if it breaks it there will be trouble and that’s why no one wants to think that it can happen.
I sometimes wonder if people know that they are putting themselves in a bad position by being all-in the stock market without any game plan except hoping it will go up and therefore just buy more to try to convince themselves through their own actions that they are right even if it means borrowing money to do so.
What they really need is a real game plan and a strategy of when to sell.
I did a post Monday on what will happen if the stock market breaks down from here.
Although I can’t predict the day it’s going to happen, I frankly believe it’s going break down this quarter and am hoping that my posts can help as many people as possible. If this post today gets one person to get off margin it’s worth it.
But I will admit that my post Monday sparked a lot of anger. One guy cursed at me with four letter words saying that I want the stock market to drop.
That’s just not true.
And I’m not sure if the stock market is going to break here in a few days or will chop around the 200-day moving average for a few weeks first.
Last year in October I said there was an opportunity to buy Bitcoin/blockchain stocks thinking Bitcoin would go up, but after it peaked in December I told people to sell all Bitcoin/blockchain, because that party was over and it was going to crash to nothing as the Bitcoin cartel lost their price control.
If I thought the market was going to make new highs and go nuts I’d tell people to buy just as I did the day after Donald Trump won.
But now it’s looking very shaky with the biggest bubble in human history appearing to just start to deflate and gold now trading opposite to the stock market with the US dollar in a bear market that no one cares about.
All I care about is trying to position my investments with the direction of the markets. I did an interview last week with Jim Goddard about where I think things are going and what is going to actually go up. If you missed it listen to it here:
I believe that this is the time for people to get off margin and dump bad positions.
Just look at your holdings and see if you have things that aren’t acting right that maybe you should just remove from your portfolio. The only way you can buy when the masses panic is if you have the resources to do so. That means having the ability to wire more money into your account when the time is write or just doing some selling now to raise some cash reserves.
It also means using this as a time to prepare mentally to buy later and to make sure you have a game plan in hand. It is those that refuse to think ahead and plan ahead that end up in a panic position later.
You have to have a plan on not just what to buy, but when to buy and WHEN TO SELL. Grab my Total Stock Trading Buying and Selling Program. I have long positions, but I also have 20% of my money devoted to one big short trade that has nothing to do with the US stock market. Find out what it is by going here.