With all this volatility going on in the markets and the VIX at such high levels, I want to break down some of my charts and see where I see us heading. At the start of the year, I made a 2020 market prediction, and so far my predictions have been pretty accurate. Is the Coronavirus causing this much pain to the markets? Sure, if you want to believe the headlines on the news, but I am not buying it.

A Brief History of My Experience in the Markets

This market has been pumped up for years and as bad as it is to say this, I am happy we are in freefall. I have been watching the market, mainly S&P futures since 2014, when I was in college. Being young, I didn’t fully understand why the market just kept tugging along. Seeing us hit $2,000 in the index, I thought there is no way we can continue to climb; there has to be a crash and reset.

The system’s set up to collapse, it’s just the matter of when? Now one person’s belief isn’t a consensus, and swimming against the current will only drown you. When you have an economy with 0% interest rates, you can’t make any money parked in the bank, so you are forced to buy equities (stocks).

2016 hits, and we see Gold finally bottoming at $1,046. Seeing Bitcoin come into the picture, I remember buying it at around 400$ to fund my then betting addiction on Nitrogensports.eu. I saw Bitcoin climb to $20,000 while I made a lot of money in an altcoin called ‘Raiblocks.’ When you look back at things, you always have hindsight 20-20 vison. You can say your should have, could have, and would have’s, but you can only reflect and learn from mistakes.

Today in the Markets

As I sit here and write this, I see Gold down 2% at $1,645 an ounce. I see a market that bounced back 5% today. Then I look at Bitcoin, you figure with times of such high fear and uncertainty, failing to gain traction. For Bitcoin, I love the concept and believe it will be involved in future finance in some way, but we are still years away from that happening. Why? Because people are dumb.

The Crypto Market

Now people don’t like hearing this, but with no money in the crypto space, I still want to see the entire market purged out. Sure, you can say we have fallen 70% from the highs as a whole, but a lot of that market cap was from projects that weren’t fully there and still need a lot of time to get there. For me, 180.65B market cap will be the pivot point. I would like to see that number tested along with the 200-day exponential moving average, which is at 170B.

For a bigger view click here.

Ultimately for me, seeing us go down to those December 2018 levels testing the entire community would be a good thing. Bleed out those toxic HODL’s. Remember, it is healthy for something to come down and reset to go higher, which brings me back to our markets.

United States Market

Resetting. Our markets still have yet to do that. We are now in 2020, and most people you cross paths within a day to day basis have no idea how bad this economy is truly doing behind the curtains. You hear on the news Coronavirus, which strikes fear into the people. It gave the Federal Reserve an excuse to cut our interest rates by 50 basis points. Which puts us at 1.25%

Getting as high as 2.5% only to slowly start to reverse, we are now quickly heading BACK to zero. You can say history is repeating itself, and the human brain is so stubborn and fails to learn from past mistakes. However, the funny thing is when you look at the overall market down almost 20%, we are still extremely overvalued.

The S&P 500

As you see below, the yellow circle is when I began my charting hobby. Mentioned above, I was extremely bearish and thought we had to crash and reset. But ask any fish how easy is it to swim against the current. The point is, being down 20% is a lot, but looking at the broader picture, we still have a lot more room to freefall.

For a bigger view click here

I wouldn’t be shocked to see us fall back to the level I thought in college was too high, 2,000. Shit, the 200-day exponential moving average on the weekly’s is sitting in the 1,880s. However, the Federal Reserve has less wiggle room as they had in the previous crash at 1.25% (Interest rates were 5% then) and a national debt that is over 12 trillion dollars higher.

We sit here and get tweets from @realDonaldTrump that everything is alright. Having a FED with less ammo and a market that rejected the emergency 50bp (basis point) cut, they have to be careful when to drop rates again because they are close to 0. Which brings me to my final point. Gold.

Gold

Moving under the radar the past year, that seems to be a lot. Gold has been trying to catch up to where it stood in August of 2011. Gold up over 5% on the year is fairing much better than the S&P at -11%. I’ve talked about it before. But a big reason why I love Gold is that it has been a store of value for thousands of years.

With so much going on in the world, it seems to be the safest place to park your hard-earned wealth. I just recently started to buy physical Gold. I plan to buy 5 to 10 grams per month. The goal is to accumulate my money into the metal slowly. I want to add Bitcoin, but as I have said above, I would like to see it fall more. I am comfortable buying Bitcoin at around 4-5,000 dollars. Until then, I am okay with just buying physical Gold.

For a bigger view click here

Putting in a multi-year cup, Gold is becoming more and more of a screaming buy. With all the economic uncertainty, it can’t hurt to have 5-10% of your portfolio into the asset. While I don’t think we break ATH’s this year, I am looking more for a nice slow grind into the $1,700s while more people flock into the metal.

Conclusion

So there you have it—my update on what is going on in these crazy markets. You might disagree with me, but I could care less as this is solely my opinion on things. I am optimistic about Gold and would like Bitcoin to fall more. However, I feel at the moment, remaining a lot in cash is not a bad idea either. You can hope to swoop of some quality stocks pennies on the dollar if we do get a more significant crash ahead. If you read this far down, thank you, if you are interested in other topics, check out some of my other posts below. This site isn’t just about finance.