My Prediction for the market after correctly calling the COVID Crash and Bottom

by SafariFeelsSnappier

The fundamentals and the “feel” of the markets are broken right now. Just like Goldman Sachs announced yesterday (5/11/2020), I think that there is a very good chance of a second crash coming to the markets.

So far, I trust my gut. I’ve been correct many, many times so far. In early January, I knew the market was coming down. On February 2nd, I even made a video (www.youtube.com/watch?v=gRmJPgljdG4) to sell stonks. I got laughed at.

Turns out, a few weeks later exactly what I said would occur happened. Early March, Markets Crashed ~30%. Based on a text I sent on Sunday, March 22, I said “I don’t see it dropping much further.” I came to this conclusion because I got news alerts that “Powell: Federal Reserve Pledges Unlimited Quantitative Easing to Keep Markets Functioning” and gut feeling the CARES ACT was nearing from drafting to negotiation phase. I bought, and told people to buy now.

Enough humble bragging. As soon as this happened, the FED bailed out the market. RULE #1: DON’T FIGHT THE FED.

Anyway, the next day (Monday, March 23rd) the Fed did come in. Since that day, the Markets have “recovered”.

The markets are going to experience a second dip. Since early April, I’ve expected a “W” recovery rather than a “V”, “U” or “√” recovery. Every day we move on, the more confident I become. Here are some reasons I predict a second dip:

  1. States will issue a second lockdown phase. High chance this may happen very soon (people freak out over confirmed cases/deaths next week as there is a 2week incubation period) or a spike in the fall. Prediction: 50%.
  2. The shutdown is dragged out way too long. States are crazy enough to extend until mid June. Who’s gonna stop them from shifting the goalposts into August, November, 2021? I see draconian states being crazy enough to do this. Prediction: 100%.
  3. People will realize unemployment numbers are not “temporary”, but permanent. The market seems to expect a quick bounce in the unemployment numbers, but I truly do not think this will happen. Prediction: 95%.
  4. Consumer spending/demand does not return. I see Q2 financial reports being a much bigger dumpster fire than predicted. April is expected to be bad, but May and June are expected to be a return to normal. I do not see this. Prediction: 80%.
  5. Edit (added): I can see the Fed’s current actions being blocked by the courts. They plan on direct violation of the Federal Reserve Act by buying bonds from companies. This is illegal and should not happen. Prediction: 50%
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With one of these or a mix of these happening, I see a second dip in July/August.

What will cause this second dip to recover? The Fed. Markets will keep falling, until then they drop ~20% and the Fed comes back again.

I predict the Fed will announce negative interest rates. President Trump wants this so badly, and it’s one of the most powerful tools the Fed has to pump the market. I don’t even think the market needs to dip again for this to happen in the near future.

I predict this will happen before the election. (September/October). Once this happens, there is no stopping how high stocks will go. As the great Warren Buffett says “Interest rates are like gravity in valuation. If interest rates are nothing, values can be almost infinite. If interest rates are extremely high, that’s a huge gravitational pull on value”.

Get those financial news apps installed on your phone ASAP. Fox Business, CNBC, etc. I DON’T CARE. Even if my prediction of a second dip is wrong, as soon as you hear that the Fed announces negative interest rates, go ALL IN. I won’t tell you what stocks to buy, but as I said before: DON’T FIGHT THE FED.

tl;dr is that I predict negative rates in the near future to pump the markets. Once that happens, SPY calls all day.

in before “this guy is full of shit”. I’m just writing my prediction

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.