After the recent COVID-19 virus event and the global market concerns that will warrant caution for skilled traders and investors, the US stock markets have entered an upside parabolic trend that will likely end with a massive price collapse – extremely volatile and aggressive in nature. Our research team continues to warn of the unpredictable nature of the current price rally and the fact that the upside parabolic price trend appears more prominent in the NASDAQ sector. If history has taught us anything, it is that these types of parabolic moves can last a while and that they always end in a deep downside price correction – usually 61% to 75% of the last upside price trend.
Our research and trading team has been advising friends and followers to stay very cautious of the current markets (excluding Gold, Miners, and certain other protective sectors). We don’t believe this rally warrants any exposure greater than 15 to 20% given the current global economic environment and the hyper-parabolic nature of the current price move. We believe the opportunity presented by the upside advances does not negate the potential risks of a massive collapse event taking place in the near future. In other words, we’re more cautious of how ugly and aggressive the end of this parabolic move will be than willing to try to find some opportunities in an already hyper-extended parabolic upside price trend.
Still, there are opportunities to be had in this trend for skilled short-term technical traders. A number of sectors continue to perform quite well and using proper position sizing for trades may allow for quick targets of 5% to 10% or more. We urge all of our friends and followers to be cautious of the current rally in the markets as we’ve only seen this happen three other times over the past 100 years: 1927~29, 1986~87, 1996~99. The collapse after the 1929 peak resulted in a 90% decline in prices. After 1987, the markets collapsed by nearly 36%. After the DOT COM market peak in 1999, the markets collapsed near 51%. Are the markets preparing for a massive collapse event right now with this hyper-parabolic upside price trend?