 Hey everyone, this is Dan. The market has been going down in the last few days and finally recovered a little bit today. Is the market going to continue to go down? Let's talk about how we can protect ourselves from a potential market crash, or even try to take advantage of what's happening in the last few days. First of all, let's look at the SPY chart. As you know, SPY is the ETF that's pegged to the S&P 500 index. About four days ago, it started to go down. And finally, it recovered a little bit today. What a bottom out was 5% from the previous peak. And at market closing today, it's still about 3% from the recent peak. We can see this downward trend line, although with this little recovery, we don't know whether it's going to continue to go down tomorrow or not. Is it going to get a lot worse? Are we heading for a 10-20% correction, or maybe even worse market crash? From the RSI indicator, we see this overbought wanting and sure enough, the price started to go down. And we saw the sell signal from DMI about four days ago and a corresponding sell signal from MACD. And then as of today, we finally saw a buy signal from DMI and the buy signal from MACD. This is by the way the hourly chart. If you look at QQQ, we'll just pegged to the NASDAQ 100 and in NAS, the picture is even more bearish. QQQ has been going down pretty much in the last two weeks. It started to recover a little bit today and the bottom out yesterday at about 9% from peak. And at market closing today, it is still about 7% from the peak. We saw the overbought signal here from RSI about four days ago and actually there was a almost overbought signal here when it reached the peak. That's about a couple weeks ago. And then we saw several buy and sell signal from DMI. Most probably here, this is a sell signal four days ago and a sell signal from MACD four days ago and a buy signal from today and the buy signal from today. The question is also, is this very bearish trend line going to continue to go down? Is this a bear flag or maybe this is the beginning of a recovery? Let's talk about these questions. I like to show you the Google trends using my two favorite indices for Google trends for tracking the market. I use the search phrase best stock to buy as my bullish indicator and the search phrase market crash as my bearish indicator. And the bearish indicator is in red and bullish indicator is blue. In the last seven days, the red line, the bearish signal has been exceeding the bullish signal and that's telling us that the market is going down, specifically peak yesterday here. And then if you look at just the past 24 hours, we also can see the peak yesterday. Today is subsided, the red line, that's why we see the market recovery. How accurate is Google trends for predicting imminent crashes? If you have been tracking my videos, you might remember that on February 23rd, 2021, I published a market crash protection video and in that video, I show the one year Google trends chart from 2020. And on that chart, we saw two peaks, the week of February 23rd and the week of March 8th. These two peak corresponded to the big market dip because of the pandemic. Ultimately, the market dropped 35% this SMP index before it recovered. That's why it's important for us to pay attention to these warning signals so that we don't lose our profit when the market starts going down like that. Now, if you compare what happened in 2020 to what happened in the last few days, this is the last 12 months. Again, 2020, we have these two peaks from the red line. And in the last couple of days, we have this mini peak for the red line. What I'm saying is that the fear level in the market is nowhere as high as back in February and March of 2020. And that's one of the reasons why I don't expect a major market correction. Yeah. A lot of people are saying that the treasury rates have been going up and that's the reason why the market has been sinking. Yes, they are partially right. If you look at 10-year treasury rate, it's being up in March and April, then it dropped a little bit and then now it's picking up again at about 1.68. Looking at the 30-year treasury rate, we see the same pattern. Now, if you look at the SMP index, we can see that these peaks of the treasury rate indeed correspond to the drop in the stock market. And that's why with the recent peak here, we see the recent drop in the SMP index. And that's why I believe the treasury rates are indeed a good indicator that we need to track very rigorously. If it goes much above the current level, we could possibly see a more severe drop in the market. At this point, it's not totally disastrous yet. Along with the treasury rates I've kept under control and that depends a lot on the federal reserve bank. And I'll talk more about a Fed in the next few minutes. At this point, if you like what you've seen so far, I'd like to remind you to please click the like, subscribe and notification button so they can encourage me to make more videos like this. And it is also for the sake of the YouTube algorithm. Let's continue. This is quite a bit of an eye chart. Again, it's a page from my February market crash protection video. In this chart, I'm trying to show what happened during the pandemic when the market crashed. And then to try to salvage the market, the Federal Reserve Board started to purchase US treasuries and mortgages. The total Fed assets consist of primarily US treasuries and mortgages jumped up from about $4 trillion to $7 trillion between March and June of 2020. And because of the increase in Fed assets, which is basically creating money, with the money flooded into the market, the stock market was able to recover. Coincidentally, the Fed increased assets by $3 trillion during the three months. And the federal government spent the total of $3.1 trillion by way of a similar program from March to December of 2020. In other words, the money creation backfill the national debt created by the US government. And because of it, the Treasury review did not go up because it balanced the supply and demand of the US treasuries. Now, if you look at what's been happening since June of 2020, on March 11, 2021, President Biden signed the 1.9 trillion stimulus bill, and that money is going to increase the national debt. That means more US treasuries have been issued. Who is going to buy up those treasuries? Not so much from the Fed this time, because since that time, the total Fed assets only went up by $600 billion. And that's, I believe, one of the reasons why the Treasury rates have been going up, because there are not enough buyers for the treasuries. In addition, they are talking about a $2 trillion infrastructure package that's still being discussed between President Biden and the US Congress. Now, if that comes with fruition, there will be more national debt, and then there will be flooding US treasuries into the market. Unless the Federal Reserve Bank will buy up those US treasuries, the rates will most likely go up. Meanwhile, because of all the money creation and the relatively bullish stock market since after the pandemic crash of 2020, the consumer price index has been going up. With all those happening in the background, there are a few major concerns or fears now in the market. You can read about these on the internet. First of all, the $3.1 trillion of 2020 stimulus bill were offset by the $3 trillion increase in Fed assets. So that was a watch, and that's why the interest rates have been fairly stable. However, we do have the additional $1.9 trillion of stimulus spending in 2021. We only have $600 billion of additional Fed assets in the last few months, and that's why there's an imbalance and that's why the rates have been going up. The 10-year Treasury rate has increased by 0.75% since January 2021, and the 30-year rate has increased by half the percentage point since January 2021, and that's why the market has been dropping recently, at least according to a lot of the pundits on the internet. And the March 2021 CPI inflation rate is the highest since 2016, and there's a fear that the Fed might have to increase interest rates to lower the inflation rate. This is just a fear, but a lot of Fed officials, including Jerome Powell, are saying that they are not in a hurry to increase rates yet. If they do increase interest rates, it will certainly drive down the stock price. That's our ultimate fear as investors in the stock market. On the flip side, there are a few possibilities as to why the market will recover from the recent dip. For example, the Fed funds rate has been at all time low and has not shown signs of going up yet. This is the chart for the Fed funds rate since 2014. In 2019, it went as high as 2.9%, and that's when we had that crash right before Christmas of 2019. Since then, the Fed has lowered the Fed funds rate to almost 0%. Unless this number starts going up, I think the market is still going to be fairly bullish. And the April inflation rate might be transitory due to the pandemic recovery and the supply chain imbalance. Hopefully, when things start getting stabilized, the inflation rate will subside in the next two, three months. And the Fed has committed to increasing assets by $120 billion a month. In other words, the similar spending will eventually be absorbed by the increase in Fed assets in the next year or two. The increase in productivity can lower inflation rate in the long term. And the standard pool first quarter 2021 earnings have been the best since 2008. Also, corporate earnings can lift stock prices. And we don't see any major bearish emotional events such as new trade war or additional new waves of pandemic. It is entirely possible that the current market correction and just do the short term over buying. To really look into this last bullet point, I've drawn this monthly chart for SPY for the last five years. During the last five years, we see the overboard signal on the RSI indicator in 2018. Actually, it happened twice. And then 2019 early 2020, later on 2020. And then more recently, among these six instances, only two times that the monthly SPY chart touched the lower bowling demand. And those two instances were number one in 2018. There was a sphere of escalation of trade war with China and also the Fed funds rate went as high as 2.5% as we showed in a chart a few minutes ago. And that certainly took down the market. And then of course, early 2020, that was due to the pandemic shutdown. During the other four instances, SMP only did as low as the Bollinger mid band, which is a 20 period moving average. And for a couple of times, it did not even reach the Bollinger band mid band. If you look at what's happening today, I don't see any major emotional events like what we see here and here. And that's why I believe SPY will recover probably halfway down between where it is now and the Bollinger band mid band. And if you look at the QQQ chart, it's very similar. And I don't think QQQ is going to even reach the Bollinger band mid band, because of the lack of major bearish emotional events. Now what are the worst case scenarios? I always like to prepare for the worst, but plan for better scenarios so I can profit from the situation of what major losses no matter what happened. These are possible worst case scenarios, if the Fed start to increase the Fed funds rate and treasury rates, or if there's a new wave of COVID cases in the US and other developed nations. And by the way, the daily new COVID cases have been going down quickly in US, UK, and Western Europe, because of the rollout of the various vaccines that is going to continue to help the stock market. If we see more cyber attacks, paralyzing major infrastructure systems, or if we see escalating trade war with China, or we see additional major disruptions in the semiconductor supply chain. Through one of those major catastrophic events, I believe S&P will not likely drop more than 10% in the next few weeks, and NASDAQ will not likely drop more than 15% in the next few weeks. In other words, my outlook at this point is still fairly bullish, cautiously bullish. In the meanwhile, I'm doing a few things to protect my portfolio and try to even profit from the situation. First of all, the first days ago, I saw some highly volatile stocks such as BioNTech and TQQQ at their recent peaks. In the meanwhile, I'm holding on to stocks with good fundamentals such as TSM, our semiconductor QCOM, Qualcomm, and ASML. And I'm holding on to recovery stocks such as RCL, Royal Caribbean Jets, which is the airline CTF and LUV Southwest Airlines. Actually, I also bought some RCL shares on a dip. And I recently bought housing stock LGIH, already gained a couple of percent on LGIH in the last two or three days. And I bought back small amounts of BioNTech and TQQQ today when the prices started to recover. I'm starting to nibble. If the market continues to go down tomorrow, I might sell these newly acquired shares, or if it goes up, more tomorrow I might nibble and buy more. That's my overall strategy. At this point, I'd like to remind you that I'm not a financial advisor. I share my trading strategies for educational purposes only. You should make your own decision when you buy or sell stocks, and you should probably consult with your financial advisors before you do so. If you're watching this video a few days after May 13th, I'd like to encourage you to look at the updates section below this video in case I've entered update notes. I'd like to remind you to click on the like, subscribe and notification button. And thank you for watching all the way to here. As usual, I very much appreciate your comments, questions and suggestions. This is about wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.