well what do you know

the s p 500 managed to close above that

significant

critical level yesterday that we talked

about in my last video which is the 50

retracement level

so if you watch my last video i said

that whenever the the market is in a

bear market it's dropped 20 percent of

the bear market and it's able to rarely

50 percent

or rather it's able to make back 50 of

its losses

then likelihood the bottom has been set

in

so that's the top of this current bear

market that's the bottom

and we call that the a to b decline

and

this level over here would be the 50

retracement level and yesterday we

closed

very strongly above this level

and in my previous video i showed you

that if you look at the history of the s

p 500 in the last 65 years

every time you have a bear market

rarely closing above that 50 level

that was it the market did not make

another new bottom so in other words

based on this development yesterday

highly likely that june the 16th was the

bottom of this bear market very unlikely

that we're gonna go lower than that

so does it mean that this is a confirmed

bull market

not just yet again we are not in a bull

market yet until uh we cross above this

level which is the 4364 level which is

which measures 20

above that low but it does say that yes

we're still a bear market but

we are not going to go lower than that

low

so where do we go from here now before

you know some people watch this video

and get really excited they say okay the

bottom is it i'm going to buy it right

now go all in wait a minute right again

remember the problem with a lot of

retail investors is that they buy and

sell based on emotions

and a lot of retail investors they tend

to sell

at the worst possible time right i know

a lot of chicken littles out there that

listen to the profits of doom out there

and when the market drop oh my god gonna

die and they sell right at the bottom

that's what unfortunately most ignorant

people do and they get purged from the

market like i said my previous event

or they sold over there right because

they sell out of fear out of panic and

now that the market is ripping higher

and you know a lot of people are now

saying okay you know the bear market's

done what do these people do they do the

opposite they start to buy in they start

to panic buying okay let's jump into

this buy right now okay so

would i buy right now no i wouldn't okay

by the way i already bought those of you

who are following me on my

private community called uip you know

that i've been buying shares very

regularly in the last couple of weeks

right

so i've bought most of what i wanna

bought

but i may still buy a bit more but i'm

not gonna buy right now right here why

because although

like i said the bear market bottom is

probably in

short term the market is over extended

it is overbought what does that mean so

again remember that prices don't go up

in a straight line

yes i do expect the market to make new

highs

by the end of the year or by next year i

don't know right it will make new highs

okay but again it will not go up in a

straight line

remember the market always move moves in

wave patterns wave

as it goes down

and waves when it goes up right so for

example you know wave down wave up wave

down wave up so it moves in these wave

patterns

similarly

on the way up it's not gonna go up like

that

okay

so what happens after

we gotta wave up wave down and wave up

what tends to happen that's right you're

gonna have a wave down you gotta have a

wave down okay but may not be exactly

here right i mean it could go out a bit

more and then wave down

later on so the point is is the point is

you know

never jump in on a wave up when it's

overextended how do you know it's over

extended well when the prices tend to

like move in a 90 degree fashion and

they kind of like stretch above the

moving averages that's a clue because it

tends to snap back to the moving

averages some people they like to use

indicators like stochastics and rsi

williams percentage r

yes you can do that as well but once you

get very experienced

in the markets you find you don't really

need these indicators because you can

just tell by looking at the price action

right but if you want you can look at

like the stochastics for example

um for those of you who are again

uh

new to uh trading or investing

and you want to look at an indicator yup

you can look at something like this

and you can see that

we are in this overbought level right so

whenever the market's overbought it

means it's stretched up it tends to

come back down okay

but it can't stay overbought for quite a

while when momentum is very strong bear

that in mind okay

now so where's the next level of

resistance

uh let me remove this first

and i'm gonna show you um

so if i draw a trend line from here all

the way down to

here

you can see that

this

will be the next level of resistance and

this trendline resistance coincides with

the 200 moving average over there which

is gonna act as strong resistance so yes

we are going to make new highs and

higher highs by the end of this year or

next year but it will not go up in a

straight line do expect a pullback a

retracement which is very very healthy

we need a pullback

so

my guess and again is just a guess i

could be wrong right my guess is we may

go up

uh to this level over here we go up here

to this 200 moving average or this trend

line or maybe even exceed it a bit and

then we're probably gonna pull back down

so we expect a pull back down again how

low i don't know right no one can

predict but

when it pulls back down

that would be a perfect time for me to

add more shares

okay

uh and i'll i will add in things like

credit spreads and all those things in

order to write the next wave up right

and then slowly it's gonna chuck to new

highs okay so there are few reasons why

i expect a pullback the first reason

again is because technically the market

is short-term overbought number two we

are gonna face some strong resistance at

the

200 moving average and the trend line

resistance and also because of seasonal

reasons

right what i mean by that there are a

couple of seasonal patterns that you

need to pay attention to on most usual

years you can see that the market tends

to pull back

in

mid september

to late october as you can see so this

gray line you see would be most years

and you can see usually what happens is

the market tends to rarely strongly

uh in the august month

and the early

september month right right at the

beginning of september right but by

mid-september the market tends to

uh

retrace

all the way to the end of october so

these two tend to be bearish months

again does it happen all the time is it

a hundred percent no it's just a

probability all right and then usually

what happens is by the end of october

early november hallelujah we have that

strong run all the way to the end of the

year so that is what usually happens

most years

but this year is a bit special because

this year happens to be the u.s midterm

election year

and for midterm election years it tends

to be even more bearish

in september and october just before the

elections and just before the elections

boom the market takes off so this line

in blue refers to midterm election years

which is this year 2022 and you can see

that

again the pattern

you will see the market tends to rally

all the way to

uh

the third week of august which we're

going to approach next week so we could

still rally a bit more and then we see a

bit of a sell-off

all right in uh september

and by mid-september

um

before october in fact well yeah well we

consolidate to october and then early

october we have got that strong run all

right so again this is not

you know a kind of prophecy or

prediction or sure thing it's just a

seasonal pattern which is interesting to

look at

again so if i'm investing i don't want

to jump in when the market's overbought

i want to wait for it to retrace nearer

moving averages

and bearing in mind again resistance is

nearby we've got these seasonal patterns

so i would be

uh more patient to add in more shares

but if you know if you have been

following me you should have bought most

of those your shares

uh in the last two or three months

during that panic selling no panic

selling when everyone is being purged

people are selling that's when you're

buying when everyone is buying and going

crazy following that's when you're

staying out of the market wait for panic

and fear again to buy remember you

always want to buy when there's fear and

panic and when everyone is excited and

they're chasing the market you want to

stay away from that you got to go

opposite of everyone else in order to

make money so this is based on

what we call these uh

monthly seasonal patterns and of course

you have got this big pattern which i

talked about a lot and this comes from

larry williams which is the decennial

pattern and the decennial pattern

basically is a pattern of all years

ending with a certain number and if you

look at all the years ending with two

which i've mentioned many many times

before

they tend to follow this pattern and so

far this year has been pretty spot on

you have to agree with that right where

years ending with two

again they tend to be very bearish all

the way to

uh the end of

july right which played out very well

this year okay and then you can see the

market rallies very strongly and

whether you're looking at this pattern

decennial pattern or the

election pattern or the usual monthly

pattern

what do they all have in common what

they all have in common is you have a

pullback right you always have a

pullback in again

september october we don't know exactly

when but there's gonna be a pullback and

that is the opportunity to really pile

in

uh to get on this bus last chance to get

back on the bus before hallelujah we

make new highs in the market now as i

show you all these chart patterns and

seasonal patterns and i talk about you

know probability that the market will

likely go up or go down based on the

trend always remember that again in the

short term no one

no one can predict for certain where the

market is going to go no one can do that

right anything can happen in the markets

but always remember that in the long run

good companies will always go up in

value always and the index will always

go up in the long run and the good news

is again you do not have to predict the

market

in order to make money from the markets

many times when i do all this analysis i

tell my students that they're purely for

entertainment purposes that even if i'm

dead wrong

it doesn't matter we are still going to

make money anyway why because we are

buying into the best businesses in the

markets we are buying into the index and

you will always make money as long as

you have the discipline

uh to dollar cost average and to hold

for the long run and if you're trading

you got to put a stop loss you got to

get out when your stop-loss is hit you

have to ensure you take profits which

are more than your initial risk so

whether you're trading or investing you

should make money consistently even if

you can't predict the market to save

your life so

predicting the market has nothing to do

with making money always remember that

the reason why a lot of people lose

money or they never get a chance to make

any money in the markets is because

they're impatient because they're very

short-term focused you only focus on the

short term and you focus on the short

term you can never ever build your

wealth you know like a lot of people say

adam how can you talk about the stock

market the stock market is so risky you

say that i need to invest in order to

beat inflation but by investing i lose

more money than holding cash

that is true in the short term for

example if you can see

year to date for the first six and a

half months

if you if you held up to cash and just

bought short-term bonds you can see that

yes you would still have lost a bit of

money because of

inflation right

but if you hold on to stocks you would

say that hey i lose even more because

the stock market dropped 24

for the first half of the year and

people look at this and they think that

hey holding cash looks safer which is

true in the short term

but in the long run in 5 10 15 years

look at this chart you can see that over

the long run

holding cash into money market funds or

bonds or fixed deposits in the long run

you do not build your wealth

but when you hold on to good companies

on the index yes in a short term you go

through these big

ups and downs but at the end of the day

you always

end up much better in terms of your

wealth so remember that in the long run

the longer you hold cash the more risky

it becomes for you

but the longer you hold stocks the safer

it becomes

here's another chart

and again the trouble is a lot of people

they're always afraid of

getting into the markets that you know

what if i get in and the market crashes

what if i buy at the top who cares you

know even if you bought at the top look

at this right in the last 10 years even

if you bought at the top

of every stock market cycle you were so

unlucky bought at the absolute top

and every time you bought the at the top

it crashed you bought at the top it

crashed even if you did that you would

still be better off

than people who

didn't dare to get in at all let's look

at some specific numbers you know how

many of you know people who

never ever invest because they always

believe the crash is coming and they

always believe that lower prices are

coming so because of that they

procrastinate they progress

procrastinate and they never ever get

started right

and

here's an interesting table if you take

a look at for example again the last 20

years from 2001 to 2020 okay and you

decided to invest 2 000 a year

into the s p 500 etf the spy

how much would you end up with well it

depends right so if you manage to buy

at the bottom of the market every year

you had perfect timing which is of

course impossible but if you could buy

uh or you could invest two thousand

dollars at the market bottom every year

by the end of that period you end up

with a hundred and fifty one thousand

dollars not bad right now what if you

just invested immediately at the start

of every year so the first day of the

trading year you just invest two

thousand dollars that's it goes higher

goes lower i don't care you would end up

with 135 000

right

now what if you did dollar cost

averaging which means that you took your

2 000

you divided by 12

and that gives you a hundred and sixty

seven dollars and you put in 167 dollars

every month

if you did that then at the end of the

period you would have 134 thousand

dollars okay

now what if you were mr unlucky you had

the worst possible timing that every

year

when you invested two thousand dollars

you bought at the absolute top of the

market every single year guess what you

would still end up with a hundred and

twenty one thousand dollars i mean not

as great as mr perfect timing right not

as great as mr buy at the beginning but

you still end up making money now the

worst person

would be the person who stayed in cash

who again read all this doom and gloom

news every single day from people saying

that the market is gonna crash we're

gonna have a great depression we're

gonna die and they read all this crap

every single day that they never get

started because the crash is coming soon

the crash is coming soon the crash is

coming soon and by the end of the day

they will never ever be financially free

they'll never be financially secure

they'll always be trapped in the rat

race of mediocrity

don't end up like chicken genius i'm

sorry chicken little and spongebob

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