Fear and Greed: Is Now the Best Time to Buy?

“What’s the difference between a hero and a coward? There is no difference. They both feel the same fear. But it’s what the hero does that makes him a hero.” – Cus D’Amato

This quote from the late great boxing coach Cus D’Amato, famous for training Mike Tyson, encapsulates his philosophy. Cus was known as the master of fear. He taught his fighters to make fear their best friend and understand that it’s a normal and healthy part of life. Without any fear, we would be dead. Everyone feels fear, but what differentiates us is how we handle it.

I’ve always believed that the psychological traits required to be a top-level fighter are almost identical to those needed to be a high-level trader. Everyone knows the old Wall Street adage, “Buy when there’s blood in the streets.” But what they don’t tell you is that even if you are an elite investor, actually doing this is incredibly difficult. They make you believe professionals are emotionless and can trade at any time. The truth is, as Cus said, they feel the same fear as other market participants, but it’s their actions that matter most.

Today, the market is filled with fear. Be it World War III, riots, elections, an impending recession, or something else, the tension is palpable. All these external factors create numerous scenarios that we might worry about. However, we must remember that 90% of what we worry about never actually happens.

Remember the threat of World War III in 2022? Or the banking crisis low in March 2023? What about the prolonged recession talks throughout 2023 and most of 2024? The Israel-Hamas conflict causing a low in October 2023? Or the threat of Iran attacking Israel on April 13th and 14th?

I’m not saying there are no issues in the world, but to my knowledge, the market hasn’t crashed due to any so-called “doomsday” events. In fact, all these events triggered minor panics, giving us buying opportunities.

Fear and Greed

For a market just coming off historic highs, there’s an overwhelming sense of panic. Whether it’s the stock market or the crypto market, fear indexes are nearing extreme levels.

I’ve lost count of how many posts I’ve read detailing market statistics that historically signal massive buying opportunities. Look at the image below, which includes just a few of the ones I’ve shared.

Is this the worst day since the pandemic crash? Has volatility reached its highest since the regional banking crisis of 2023? The most tumultuous earnings season since 2008?

To me, this sounds like sheer panic, but if we look at the charts and cycles, we see current prices are slightly below all-time highs. This seems somewhat illogical.

At times like this, everyone feels fear, but that’s when our work supports us. When these emotions don’t exist, all our analyses tell us to look for a significant August low. Now we’re here, and everyone is panicking, but we won’t throw all this out the window. This is the foundation that allows us to see clearly when others panic.

I’ve meticulously reviewed various cycles to see where we might be wrong, but I can’t find evidence of a complete meltdown here. Let’s look at the charts to see what I mean.

Stocks

I’ll keep this relatively simple. If it isn’t broken, don’t fix it. That’s what our 60-year cycle tells us. It’s worked well all year, and we’ll continue to track it.

Today, August 5th, marks the day 60 years ago when the market hit a new low after a 50% retracement. Since the 17th, I’ve been saying this correction has more downside potential. Even after a historic 6% or 7% rise, I wrote to premium subscribers that this market would hit new lows. On Friday, the market indeed hit new lows.

However, now we’re at the stage where the panic has almost run its course. Below is the plan I outlined in last week’s market outlook and how it has played out.

This is a very typical adjustment window for an election year market. That said, September might see a rebound, with further declines in October. But we’ll talk about that later. For now, I expect the market to start bottoming out.

It might not fully cooperate until later this month, so don’t go all in, but I mean to start looking for our typical bottoming signals: reversal candles, bullish RSI reversals, three-day reversals, etc. Let the market tell us a bottom is in.

This is the weekly view since the same period last year. This is the third three-week adjustment, leading to a 6% decline. As you can see, I’m suggesting that how strong the rebound is from here will determine if this is the low or if we’ll see a longer adjustment like a year ago in October.

Finally, the dates I’m watching here are August 8th, a Gann natural date, and August 16th, 120 degrees from the low in April (the low of the year).

Bitcoin

Bitcoin is going all out, trying to catch everyone off guard. Fortunately, we’ve viewed this as a buying opportunity since early May. I’ve outlined the plan for weeks.

As I’ve said, when things start to get chaotic, we must stick to our plan without any emotions. While this is a challenging move, let me tell you why I believe this will mark a major cyclical low for BTC.

These daily time dates by degree have been powerful indicators of trend changes, and when we cluster so many time dates together, it can be a strong signal. When you pair this with higher time frames outlined in previous reports, you get a significant trend change. In this case, we have a 90-week and 20-month window combined with our daily time frame analysis.

The dates to watch this week are specifically around the 6th to the 9th. Remember, the Gann Natural Date is also in there, August 8th.

Conclusion

These environments aren’t easy, but the best learn to thrive in this fear. So far, we’ve predicted every major low in this market, and I believe time and our analysis will prove right again. Remember, we’ve planned for this low for over three months, and now it’s time to execute. I’m not telling you to be a hero and take extreme risks, but to ignore the 95% of participants who are always on the wrong side of the trade.

As for specifics, I think even if we see a low this week, the stock market will struggle to find footing in the coming weeks. The same goes for crypto. I expect the likelihood of a significant low in the coming days to be confirmed, but after such a drop, the market usually takes time to settle. Then we’ll have strong seasonal factors coming in October. I believe that three months from now, we’ll look back at these crypto prices and think they were a steal. Moments like these can make or break your entire year, so learn to make fear your best friend.