Dear Reader,
2008 still burns bright in our minds as one of the roughest economic times in recent history, and in many ways 2022 was even worse despite the Fed’s belief that inflation was transitory.
Out of 12 market sectors, only one can boast of positive returns over the past year – Energy.
And that’s no not surprising since we all experienced the high cost of fuel first hand.
Well, let’s take a look at how bad things were last year and what we’re up against going into 2023, and then I’ll tell you what I’ll be doing to make this year every bit as profitable as 2022.
2022 Harsher Than 2008 – And There’s More to Come
Inflation was the hot-ticket item in 2022, and while it remained under control in 2008 at -.02%, 2022 blew the lid off as it peaked over 8%, and inflation is expected to remain elevated for quite some time, which will not bode well for the stock market this year.
Thanks to high inflation and rising interest rates in 2022 the bond market go hammered. By comparison, in 2008 the U.S. Core Bond Index lost 4%, but bonds lost 12% in 2022 despite the typical inverse relationship between bonds and equities.
We also saw the stock market lose 25% of its value by October, but with the year-end rebound we ended up losing only 20% for the year. By comparison, the Great Recession witnessed a 37% market loss in 2008.
However, the 2008 market loss occurred in a single year, and if we look back a little further to 2001 where the market lost ground over a two-year period, we can get a sense there’s more losses to come based on our current economic situation.
By October, 2001, the market lost 25% of its value, but then with a year-end rebound, it ended up losing only 10%. It was the following year that the market shed another 25% of its value
Similarly, our market may have lost 20% of its value last year, but with additional concerns such as a global recession we can fully expect to see additional losses in 2023.
The IMF director is expecting simultaneous contractions in all three major economies (U.S., EU and China) this year, which is likely to be a driving force behind 33% of global economies shrinking into recessions this year.
Unfortunately, we know that recessions and bear markets go hand in hand.
But I’m happy to report that my subscribers managed to blow the lid off the market last year with pattern trading, and I am committed to work just as hard this year for your success.
Finding Success with Patterns
I don’t get to riled when I see all the negativity in media headlines because I know that emotional trading can put you on the fast track to losing money.
Instead, I’m committed to following what the data is telling me, which also means following rules for trading.
In fact, just last April I launched new software, using Quantum Data Scripts, to identify tradeable and repeatable patterns.
The first 11 trades created a win streak right out of the gate, and I warned my readers there would be losses, and there were.
But in the end, patterns proved to win the day – or in this case, the year.
You can see the success we experienced with Quantum Data Profits by looking at the image below.
So, despite IMF director, Kristalina Georgieva, acknowledging the reality of a global recession, which is enough to cause trepidation in anyone, I am committed to paving another successful path by relying on rules-based trading.
Whether the market trends up or down, or becomes choppy like we experienced in 2022, you’ll continue to hear me speak of charts, trends and trading opportunities each week as I hold discussions about the opportunities knocking at our door.
Let’s find success together in 2023 by focusing on proven, systematic trading rules.
Tom Gentile
America’s #1 Pattern Trader
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