Every major asset class other than commodities (~DBC & DBA) is on a Sell/Out condition. FWIW this is only the third time I’ve seen this in tracking it monthly since 2011.
The Naz has gone to full BearCatcher bearish, and ‘BC IV’ the 26w/52w average also just flipped on it Wednesday.
For the first time probably ever I am 95% in cash as of today’s close, following the GTAA signals, the BCs, and other intermediate term behavior.
Not a recommendation, just sayin’ - I’m much closer to the end of my working/savings era than the beginning so I don’t have much time to make up a huge $ loss - 2008 was 14 years ago. I am well aware of the maxim that to time the market, you have to be right twice. But these conditions were what the BearCatchers were designed for.
FC,
But once full BearCatcher metrics are signaled, the markets have already fallen by “X”.
Does your data suggest a further ways to go of X + Y?
In other words, depending on when you exited the market in 2008, you could have been close to the top or the bottom.
My guess is the indexes have more room to fall, but really it is up to the megacaps with their outsized weighting.
Certainly are a ton of stocks out there down 50-60-70-80%+ since Nov 2021 peak. Call it 6 months, then. With the way things are automated now and how quickly news is communicated/absorbed, algos, etc… I contend markets move more quickly now than in the past, both up and down, but that may just me being naive.
Dreamer,
True. But here’s the conundrum. The worst thing we can do as equity investors is get out too early - get into whipsaws, be twitchy, constantly in fear. (Check out mechinvesting.wikidot in the FAQ). So, they are blunt, moderately slow moving instruments. They are defense against big, damaging drawdowns like 08.
Backtests of the BCs through many different eras and spans of investing lifetimes highlights that there’s a higher probability of a worse or extended drawdown after they have been triggered. Which is why it’s important to use them with discretion, but when they are all singing in a chorus (bullish or bearish), it’s worth listening - it’s either “safe” to be in (75% of the time), or “not the best time to be in”.
That said, the major flaw these indicators have is that markets have just gotten faster over time. But; more than a few backtests have been run showing that one might have gotten out with about an 8-12% loss back then after about 4 months, and watched the carnage that happened over the following 12 months from the sidelines - instead of being down 35%.