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Has the Stock Market Bottomed? Time to Buy? By Adam Khoo

Has the Stock Market Bottomed? Time to Buy? By Adam Khoo
hi this

Adam

Koo here and we had to week five of the bear

market

the kovat 19 pandemic bear

market

and we actually hit a law right here at the - 36 percent mark which is 36 percent below the all-

time

high of tree tree 9 tree on the S&P 500 since we hit the all-

time

low we have kind of like rarely up to this level over here where we still remain roughly about 20 roughly about 24 percent below the all-

time

high so the question is have we seen the bottom and can start only go up from here
has the stock market bottomed time to buy by adam khoo
let's export us in this video before I begin important disclaimer no one can predict the future and I'm not a fortune-teller I can't predict for certain all I can do is I can look at probabilities is it more probable that we have bought them and we are likely to go up or is it less probable and B some probabilities we can take intelligent investment decisions that's the first thing this of us disclaimer right the second thing is when we attempt to

time

the

market

bottom we can
always

time

it to the exact day or minute or hour I love to but it's almost impossible unless you're lucky all the

time

but what I found is in the past I've been able to

time

the bottom of bear

market

s as close as possible but some

time

s I'm off by about a month or two and I'm going to show you that it doesn't matter whether you're off by a month or two but as long as you are close enough to the bottom you can make great decisions to build your fortune once the bull

market

arrives alright so with that let me show you how I determine the probability that we have actually reached the bottom of this bear

market

what things I do is I look at matric of indicators and one of the most effective indicators I found in calling bottoms of bear

market

s our combination of two indicators the first indicator is the Williams our indicator and I'm using the 52 deep setting right so again I'm looking at the sp500 I'm looking at weekly candles they work best when
weekly candles so why 52 on the Williams our indicator because 52 weeks is one year okay now the Williams our indicator was invented by Larry Williams one of the you know best traders in the world I respect him tremendously and he came out this indicator to tell when

market

s were overbought or when they are oversold all right so obviously we were looking for bottom we're looking for the Williams are indicated to be over Seoul so how do us all so so look at this indicator you can see that
we've got an upper boundary which is the -20 boundary this dotted line over here and we've got the minus 80 boundary which is this dotted line over there and of course we've got all these squiggly lines so we're looking for this line to go below minus 80 so for example you see this year that's all below minus 80 so this tells you that the

market

is oversold on a 52 week

time

frame and when it's over Seoul it's like a rubber band stretching it down what's likely to
happen that's right it's gonna bounce back up again but I found that just looking at this is not reliable why for example let's go back 20 years this was the year 2000 to 2003 this was a bear

market

as you can see over there this was about two and a half year bear

market

now if you just look at the Williams are you would have gotten a buy signal over here right because it was below minus eighty if you bought over there guess what in went lower you got another buy signal bother when
lower another by so you know it's not really good at you know picking the bottom because it gets over so but even more over Seoul so we can't just use that by itself so what I do as well is I look at this other indicator that tells me the average true range that has been normalized now what's average true average range refers to the range of the candles or the or the daily in this case the weekly volatility I don't know if you noticed that when the

market

s going down the closer
it gets to the bottom the bigger the volatility the swings during the day of the week I if you notice for example about a week ago right when the

market

was like you know minus 36 percent of the all-

time

high the

market

was swinging you know seven percent one day seven percent of Nyx days so the Rangers were very very wide we call it really high range days where ATR exploded average true range exploded okay so this indicator tells us when the range is AB nominally abnormally big abnormally big
alright that's right okay so you see this dotted line over here this orange dotted line okay that's the ad line so any

time

the ATR is above 80 the ranges are abnormal okay so when is it above 80 then there there can you see that okay great so we've got two indicators now we have got the we lips are and for rhythms are we are looking at it to be below minus 80 correct for the ATR monoeyes we're looking at it to be above 80 now here's the thing to call a

market

bottom both of
them should show us their signal at the same

time

in other words we want to see that the Williams R is below minus 80 and the ATR normalized is above 80 when they both happen at the same

time

we are very close to a

market

bottom okay so let's go back 20 years and look at all the bear

market

s and see how reliable this indicator was again going back to the year 2000 that's when bear

market

started the dot-com bust right calm crash and you can see the

market

bottom here the

market

bottomed

in mid of 2002 right now look at something interesting when the both indicators coincide that's right at that point can you see that the Williams are was below minus eighty over here but it wasn't a bottom signal because the ATR was not above eighty okay now over here check it out the Williams are went below minus 80 and the ATR went above 80 so we have got those two indicators coinciding and that called the

market

bottomed

to the exact week all right so it once you get these two signals
has the stock market bottomed time to buy by adam khoo
and you start to accumulate shares will you be pretty happy does make sense right pretty cool right now of course this could be a one-off fluke so we got to see did it work in other bear

market

s as well so what happened after that so after that bear

market

of 2000 or 2000 2002 the

market

then went on right

market

went on went on so where was the next bear

market

there we are so the next bear

market

was this boom okay and that was the financial crisis that started in October or seven and where
did it bottom okay let's see wet bottom let's just move the yeah okay so it actually bottom here it bought them in February of oh nine so did our indicator work this

time

okay let me just zoom it in and you can take a look for yourself let's just stretch it a little bit over there okay so once again

market

bottomed

was here February over nine so where did our indicator indicate the bottom all right so again you can see Williams are when below minus eighty starting from here and we
know that it's not accurate because you thought they would have died as well right but you can see that at this point the ATR did not go above eighty okay now that the ATR went above eighty here but this wouldn't have been a buy why because the Williams are was not below minus eighty so they're not they are not coinciding they got a coincide got it all right so where do they start to coincide they started to coincide here at this point so there you have it we have got the Williams
are below minus eighty and we have got the normalized eighty are above eighty so the

market

bottom was called actually here at this point right so if you started to accumulate shares and say okay that's the bottom over here and you started a cubic shares over there would you have caught the exact bottom no you wouldn't have because you went up a bit and came down again to make a second bottom can you see that so like I said this technique you can't call the exact bottom and the exact
week at the exact day or hour you may be off by a month or two but question does it really matter it doesn't matter why because if you start up buying shares here what would have happened okay let's let's move our charts over there okay so if you started to buy shares over here yes it went lower slightly okay but within the next two months or so would you have been very happy yes you have caught the next bull

market

remember after every bear

market

is the next bull

market

and you can
always catch the bottom you don't have to as long as you are near the bottom and this way I tell people that once this indicate that shows us where near the bottom please don't buy all in one day for goodness sakes you know just buy a bit first and it's average in so every week you just buy more buy more every week so even if you're off by one or two months it doesn't matter but you get in near the bottom instead of getting in here and getting this big crash you get in there
and you're really happy got it okay when does the next bear

market

okay now this was not really a bear

market

well it was but it was a baby bear

market

like this one over here right so you can see that this was the a drop over here MA well it was a very small bear

market

and sure enough did we get the signal again yes we had we limbs are going below 80 - 80 sorry we had 80 are going above 80 so we had that buy signal get over here so could have again bought over there so if you bought over
them would you have been happy buying over here let's see well yep pretty happy okay because he's getting in over there you'd have again caught the next really strong bull

market

very very powerful right okay so let's move on when was the next bear

market

so again going to the right going to right and this was a bit of a sell-off not really a bear

market

now the next big bear

market

was actually there this was December 2018 the correct yes December of 2018 you can see that was
minus 20% drop bear

market

and did we get a buy signal again yeah Williams are when below minus 88 er when above 80 yeah it's really small but it went just above 80 over there check it out just above 80 just touching it okay so that would have been a buy over there okay so would you have been happy buying over there let's check it out ready oh yeah pretty happy you have caught that Knicks bull and of course now we've got the Cobra 19 Black Swan they just hit us like a ton of bricks
around again alright so again we can't predict when the next bear

market

will come but we kind of like can tell where we've hit bottom so one week ago again let me just zoom zoom this in a bit right I'm just make it bigger okay there we are okay so a week ago we plunge to the bottom here at 2000 tree on the S&P 500 right like I said from the top to the bottom it was a 36% drop guess what Williams our when below minus 80 and 80 our when up above 82 a crazy 120 so this signal a
potential bottom of the

market

at 2300 points now coincidentally if you have watched my bear

market

survival die you would have remembered that in the last hundred years of 21 bear

market

s the average bear

market

as you can see average of all the bear

market

s was a drop of minus 36 percent coincidence I think yet I don't know maybe secure incidence maybe it's not right but that's something interesting interesting now the other thing I find interesting is that now let's zoom in a
has the stock market bottomed time to buy by adam khoo
bit closer right I've been showing you the weekly charts now let me just zoom into the daily chance over here let's go to the daily charts alright so these are the daily charts you can see that big plunge all the way down again this is the minus 20% level and this is the minus 30% level and again we reach the minus 36 percent level over here okay so the moment we hit that level we started rallying all the way up right this was raised very strong rally now here's the intro same thing
we did not rarely on good news we rarely on bad news in fact we read it on the worst possible economic news that we could have gotten in fact it was the worst news in the history of the US

market

s was the news the first major bad news that happened over here was that jobless claims was 3.3 million and then just yesterday we had the news reporting that jobless claims was 6.6 million so imagine 6.6 million Americans are out of a job now that's the worst economic news you could ever think of
and guess what the

market

went up so what does it tell you see bear

market

s don't die from good news they die from bad news so once you see bad news coming out and the

market

no longer goes down it tells you that the

market

has already expected the worst case scenario and nothing more you say can get it to go down another thing the

market

is telling you is that everyone who has needed to sell of desperation or panic have already sold so there are hardly any more sellers left and those who
have sold have so they're in cash right now which means a lot of cash in the sidelines which means that when a cash comes back that would drive the

market

higher now a lot of people be thinking and how can the

market

possibly go up from here how can it bottom the economy is gonna get worse more people are gonna get in fact that we're just at the beginning of the infection curve more people are gonna die in fact the number of deaths is only gonna peak somewhere in mid-april or mid-may
more people are gonna lose their jobs now six point six million unemployed they are now looking at possibly twenty five percent unemployment rate in the next few months more people are gonna go out of business right yes I don't deny the fact that the economy is gonna get worse more people are gonna die more people are gonna infect it I know that I remember that the

stock

market

is not the economy the

stock

market

moves six to nine months ahead of the economy the

stock

market

is a leading in
kate of the economy in other words the

stock

market

doesn't care what's happening now the

stock

market

only cares what's happening nine months or six months from now make sense now a lot of people always think hey i will only start to invest when the economy recovers i will start to invest when the epidemic is over the trouble is the

stock

market

will tend to rarely and go to all-

time

highs way before the economy recovers the

market

will start to move up way before the pandemic is
over because the

market

moves ahead of the economy so that's one thing good I understand now again remember mine is different my disclaimer I'm not saying that this is the absolute bottom it could be but again we could be off by one or two months which means that could we in fact let me just go back to the charts on the Wheaties again could we in fact for example could this be a short-term rally or we could have big cat bounce where you bounce to you know maybe two six three zero
there's a strong resistance and we go back down again yes that's that's impossible in fact if it goes down again I'm looking at it to go to probably the two thousand level in other words the first bottom was two thousand three hundred if we do go down again we could possibly hit the two thousand level okay and that would represent from the top to the bottom a minus forty percent bear

market

drawdown which by the way if you look at my chance again over here you can see that the
average of all bear

market

draw downs was minus thirty six percent but with a recession coming it could be 42 percent so again is you know plus minus five to six percent so the important thing again is an investor is even if you start buying over here don't buy all in just buy a big average in the

market

so you just buy a few shares right just get average in every few weeks so we do come back down again to another low hit as good news you get to buy more and a cheaper price you just average
more in again now it doesn't matter if it goes down at a five to six percent you know why because once the bear

market

is over the bear

market

is dead the next bull

market

will begin and the next boom

market

I can guarantee you will not go up a hundred percent he's gonna go up two three four five six hundred eight hundred percent like all previous bull

market

s why really simply because of the Federal Reserve this is the election year and the Fed and tram will do whatever it takes to pop
the

market

sky-high and they've got the means to do it remember the Federal Reserve can do whatever it takes to palm the

market

up the

market

is rigged is rigged to go up what can effect do where the Fed cut interest rates to zero they could go even go to negative interest rates they have launched unlimited quantitative easing which means they're printing money like there's no tomorrow and with all this money what does the Fed do they buy ballsy by Treasury bonds but now they're
buying corporate bonds and the Fed has even said they're gonna even resort to buying

stock

s symmetry the Federal Reserve stops to buy

stock

s nothing can stop them they can push the

market

to all-

time

highs so what does it mean when interest rates go to zero and the Fed prints money it means in the long run the value of the dollar will keep going down which means if you hold cash is gonna be trash alright in the long run as you print money what's going to happen is gonna lead to the rise
of asset prices that's why we call it inflation so property prices are gonna rise

stock

prices gonna rise in a lot so in a long run investors will get rich in richer people who save cash under their pillow will get poorer and poorer and all the more that's why have to learn how to invest but again remember when the bull

market

comes back not all

stock

s will rebound

stock

s of companies that have been badly damaged by the crisis may never other so avoid

stock

s whose earnings and sales and
competitive advantage have been damaged by the crisis for example I avoid energy companies oil and gas I'm going to avoid them avoid Airlines avoid you know semiconductors avoid those stuff that are really competitive that had been hurt by the economy I invest in recession-proof virus proof

stock

s like Microsoft which is benefiting from you know cloud computing the in fact cloud services increased 700 percent during the lockdown the more people stay in the more deeply online games look at
gaming coming online gaming comes at $0.10 look at my previous videos on current virus proof

stock

s those are the

stock

s are gonna rebound faster than any other stop all right so I hope you learn something new today's I don't go like I said I'm not a fortune-teller I can't predict the future for the last 21 26 years I've been in the

market

s I've made my fortunes calling

market

bottoms but I don't call the exact bottom the exact date I don't have to as long as
I'm around there plus minus 5 6 % plus minus 1 or 2 months I'm making enough money to build my next fortune and so can you I hope this has helped you do subscribe to this video or do subscribe to this channel for the latest videos at the same

time

if you like to you know let a lot more bhai read the

market

s how I analyze and how to use all these wonderful indicators join my value momentum investing costs called the will investor or my professional

stock

trading course we can learn how to
generate an income from anywhere in the world even at home this

Adam

COO signing off I'll see you soon so if you want to be the first to get my next video on youtube do click the subscribe button right now if you wanna check out my online courses go onto purana profits calm where you can enroll in our professional Forex stop trading options trading and very momentum investing courses we're gonna learn how to trade like a professional and generate an income anywhere in the world if you
would like to come you Singapore within my live classes wealth Academy gone too well for can be global comm is elgu and Mina

market

s peer review