Real VIX, S&P500 Forecasts vs Jim Cramer's expectations
Friday - August 30, 2019
After reading "Three charts show investors should get ready for a big rally in the stock market in September" at Cramer's site, I was set to question the data to see if we really have this wonderful time in September. He was inspired by a cycle data (charts) shown by a famous trader - Larry Williams.
I've heard Ray Dalio said recently he is waiting for times to buy shares at lower levels due to coming recession... he was in cash 75% or so. Nobody wants to buy expensive stocks. That's understandable. Jim Cramer is from another clan. He is to make more investors come to the market to make money for hedge funds in the end.
Finding good investment ideas is a challenging task, so it's much easier to check one's trading ideas as you don't need to dig into data. Simple number crunching is OK in most cases. And I started with VIX index. My D1 forecast for September-November showed that there will be a jig-saw, as there are times index is up, there are times index is down every month. More interesting sometimes VIX has good rally days. And after that I felt I need to see what is going to be with S&P500.
My preliminary verdict without deeply counting S&P500 (D1 forecast is available for three months as well) is: No Big and Easy Rally, the rally will be abrupt. Be very careful on October 10, 2019 - bad day for S&P500.
And you shoud be relaxed as the rally will not be in September. On September 2, 2019 - S&P500 is down, starting the next month badly. Support levels for the index are extended, think that investors are reluctant and would be waiting for the "guides" and positive news.
In my view the best strategy will be Hit and Run.
I recalled my childhood experience at the Caribbean Sea when I was hit by a huge wave and dragged to the shore several times. So my advice don't be dragged in the open sea if you portfolio sinked, grab the ground and get
to the safe shore the cash.
Cycles are good, but they are like waves, you don't have exact understanding when an important cycle take its turn and hit you. Time is more adequate in the markets. It also offers protection for investors as it's boundaries are more fixed.
And what about September?
According to W.D.Gann bear markets usually start in September to November at the end of the 9th year and a sharp decline takes place.
So why September is mentioned, please take you own judgement.