OGIG is the code for O’Shares Global Internet Giants and its portfolio has much in common with the shares selected for Quentinvest. OGIG did brilliantly in 2020, peaked in February 2021 like the Chinese shares some of which it holds, then made a second peak in the autumn of 2021 before declining sharply in 2022.
If you look at this chart you can see how looking at the QV portfolio made me warn that it was time to ‘circle the wagons’ and even go fully liquid on 6 December 2021 and then send another alert saying ‘Charts look terrible’ on 6 January 2022.
I am increasingly coming to the view that the bull market, especially in technology shares, ended in February 2021, which means this bear market is already 16 months old. The Coppock indicator for OGIG and for many individual shares began falling in February 2021. On this analysis November 2021 was more like the second top in a double top pattern.
The Coppock for the Nasdaq 100 began falling in May 2021 although the index, which is heavily weighted for a handful of giants like Apple, Amazon, Alphabet, Microsoft and Tesla, carried on rising until November 2021. The behaviour of the unweighted Nasdaq Technology index was different again with Coppock turning down in August and the index topping out in November 2021.
The Nasdaq Technology index is charted above and is still in a full blown bear market with falling averages, falling Coppock, no green candlestick and no broken trend line. As long as it is falling there is no telling how far it might fall. As King Lear discovered when hearing that his beloved youngest daughter was dead however bad things are they can always get worse.
However I am impressed by the fact that this index is holding up well suggesting that the long bull market that has been running since 2009 or even 1945, depending how you look at things, is still intact. Newspapers and the media always focus on the bad things that can happen but good stuff happens too. If I compare life now for most people with what was happening when I was a child the transformation is so incredible it probably took billions of years to effect so much change in the deep past. Humanity is on fire although this may only be fully understood in retrospect.
Meanwhile there is a very important thing to understand about bear markets. In themselves they are painful periods for investors but they create huge opportunities. Just take Coppock. Opportunities to buy shares when Coppock is turning higher after a significant decline are rare. You can see on the chart above that there have been four such buy signals for the Nasdaq Technology index since 2009 so one every three years. Funnily enough that spacing works rather well which may have some significance. In August 2022 it will be three years since the last Coppock buy signal.
I want subscribers to really take this on board. We are approaching a rare opportunity to make money from buying shares. I believe that I will spot this opportunity when it occurs using the indicators I have. I am also hopeful that my newly developed trading strategy is going to help us make those gains much more safely than in the past.
Instead of buy and pray we have buy and, when the the moment is ripe, sell. This is a huge change from the way I have approached investing in the past. I believe it is an exciting development and also that it makes leveraged investment a more realistic option.
This will all be discussed at length in future alerts because I want my subscribers to be ready to take maximum advantage of the next bull market whenever it begins using the strategies that I have developed and am developing.
One point that I have already mentioned is that my approach has become much more chart based. Fundamentals are important to determine whether or not a company is 3G (great growth, great story, great chart) but once that determination is made it is overwhelmingly all about charts. This is in line with my mantra that shares are just like bitcoin and bitcoin is just another share albeit with the price even more loosely grounded in fundamental analysis.
Just think back for a moment. There are are many highly paid investment analysts and strategists on Wall Street. How many of them told us that in 2009 a fabulous bull market was getting under way and how many of them in the autumn of 2021 told us to expect a huge sell-off. If anyone came close I was one who did and that analysis was entirely chart based. I used Coppock to call the turn higher in May 2009 and then used my QV table and the balance of shares looking negative to those looking positive to issue my warning on 6 December 2021. Fundamentals on many shares still looked amazing and look good to this day but that didn’t stop the sell-off. Market analysis for me is increasingly chart analysis.
At the moment in terms of actions I am dipping a toe in the water with purchases of shares in fast-growing Chinese businesses, the ones that led us into the bear phase and maybe are going to lead us out of it. I am also buying modest tranches of QQQ3 into weakness because I believe that will ultimately prove a rewarding strategy. The great thing about all my strategies is that you don’t have to commit large sums to do well. This makes it a game and that is what I think investment in shares should be for a certain proportion of your assets. Do it for fun and you may be amazed at how well you can do.
I have really said it all above and in previous articles. This market may be in a bottoming out process. Many shares have fallen sharply against the background of a continuing technology revolution. China is emerging as a massive force in the global economy which is beneficial for them and for us and we are all intertwined in this process so that is not going to change. Even Russia, hopefully not led by the miserable 4x who is currently in charge, will want to reengage with the global economy at some point. It so obviously makes sense to do so. I don’t expect inflation to become embedded though it is certainly elevated at the moment and I don’t expect interest rates to climb anywhere near past high levels. There is plenty for people to become positive about when the mood changes which it will at some point. I am watching and waiting for that to happen.