The global market plunges over the past week have surprised most investors and even professionals. The true cause may have been the implosion in the "Yen Carry Trade," which reportedly involved about $4 TRILLION of highly leveraged money, up to 300:1.
We explained the Yen Carry Trade in our latest research services and thus we were able to forecast the length of its effect on the markets on "Black Monday" (August 5, 2024) and again August 6, when we determined it was a near-term market bottom.
In fact, one day before Black Monday, we published our latest Wellington Letter on August 4, 2024 forecasting that investors should "expect further selling in the broader market" while showing the evidence on many charts using our expertise in advanced technical analysis.
One important chart we showed was the daily chart of the “Percent of Stocks Above the 200-Day M.A.” indicator. We explained,
"Since mid-July, (this indicator) has been testing the resistance level in the 65% area (red horizontal line), which has been strong resistance over the past 18 months (red shaded areas).
Those peaks coincide with the peaks on the MACD, which led to downside crossover “sell” signals (bottom, black arrows). The past two days the MACD once again crossed over to the downside for another “sell” signal. Therefore, expect further selling in the broader market, even if there is a brief relief rally."
See the chart from August 4th below:
Then, after the close this past “Black Monday” (August 5) we said in our shorter-term trading services that a bottom was made, forecasting,
“Tomorrow (August 6) a potentially sharp rally should start based on all our trustworthy indicators.”
As always, the first phase of a bear market is never believed to be something serious by most investors.
Everyone, including individual and institutional investors, money managers, and hedge funds were invested “up to the gills” all summer long. Therefore, there is a lot of selling still to be done in the coming weeks and months.
We are not “perma-bears” and we know how to participate in Bull markets. However, market turning points like the one we're in now can provide terrific opportunities for those who know how to navigate the markets.
Ahead of the last bear market, we gave our warning signals in October-November 2021. Then, in late November the DJI plunged nearly 1800 points in just 4 trading days. After a year-end rally, the bear market officially started on January 5, 2022. See the chart below:
Given the importance of the current market environment and recent volatility, we would like to offer you a rare opportunity to get FREE ACCESS to our latest issue of the award-winning Wellington Letter titled, “Preparing For, And Profiting From, A Bear Market" (published August 4, 2024).
We feel it is a very important issue that anyone investing in the markets should read. Our work suggests that we are now entering a bear market, given a number of factors which we explain in our Wellington Letter.
Click the link below to gain FREE access our latest issue (August 4, 20204) of the Wellington Letter:
- Read Our Latest Wellington Letter Here: "Preparing For, And Profiting From, A Bear Market"
(no sign up or credit card required)
We’re confident you will find this important issue of our Wellington Letter very useful, enlightening, and perhaps even contrarian at times.
Wishing you successful investing,
Bert Dohmen, Founder
Dohmen Capital Research, est. 1977
Editor of the award-winning Wellington Letter
