The reaction when the market starts to correct is the same, run for the hills, the world is ending or some variation of that theme. However, if you spend a little time looking at the history of the markets one thing becomes clear. Those that panic gets hammered and those that remain calm walk away with the spoils.

One way to visually see the “deviation factor” is through the use of standard deviation bands. Many software programs on the market will automatically fill in the Standard Deviation (SD) bands; Ideally, the setting should be set at 3SD from the norm, but settings of 2SD will suffice if you are unable to alter the settings manually. When the markets touch these ranges, and the trend is up, then backing up the truck is the thing to do.

Big Charts does not allow you to change the settings, they are fixed at 2SD, but there are sites out there that will let you adjust the settings.  Despite this limitation, one can immediately spot two great opportunities; 2003 and 2009, clearly illustrating that fear never pays.  As long as Fiat is in play, the Fed will attempt to reflate the economy. Naysayer after naysayer has stated that one day the masses will wake up, well they are still waiting for that day. Most don’t even know what Fiat stands for, and even fewer are willing to give it up.  There is a saying don’t fight the Fed, and so far that saying has held true.

Strong corrections falling in the 2SD ranges and beyond should be embraced. From a long-term perspective, every back-breaking correction or crash has proven to be a buying opportunity. Knowing the trend does help and we put that to maximum usage; it’s for this reason we have adamantly stated that the Bull Market the bears were calling an end for would not end shortly. Several years later, and the Bull  we foretold remains strong; the bull market will end but not before the crowd embraces it like a long lost love

Stock market crashes should be viewed through a bullish lens,