The better question is:
“ Will I be able to retire at all? ”
For some,
“ How early? “
In America, average 401k nest egg for employees at age 60 is a precarious $270,000. This is not great news. By several models and varied metrics it’s not enough to generate adequate retirement income. If you’re 35 and packing 15–20 percent of your monthly earnings into your 401k, you’re doing well according to various planning guidelines. Gratefully, my kids are in this position and I advise: “Leave it alone. Time is on your side.” However, if your income is lower, or you’re not able to pack away 15% every month in a 401k, then you may face a predicament come 60.
The national average 401k savings rate is only 7.5 percent. If the rate of invested savings doesn’t somehow increase, adequacy of the balance to generate adequate retirement income is precarious at best. This low US average is undoubtedly due to college debt obligations and a family’s cost of living, not to mention inflationary pressure. Then, there’s the big market correction, which hits your 401k like a machete every 8–10 years, setting you further behind. Your “401k becomes a 201k” over three horrid weeks.
Hence, the question: Is a rescue of your 401k worth the angst of selling and repositioning advantageously at market prices 30–40 percent lower?
It may be.
I’m a swing trader. I’ve been reading tells and deriving swing trade methods for over 25 years – since 1999.
Markets are not random.
A market doesn’t just crash out of thin air. Yes, there are fundamentals and catalysts which serve as causes for market movement. More importantly there is known, reliable wave structure integral to and preceding such a crash or reversal or correction. We’ll talk about these in layman’s terms.
Likewise, a market streams data, which generates Price bearing Momentum. Indicators measure Price momentum, but Indicators don’t have momentum. And this distinct difference does magic. The Indicator turns first! Predictively.
Price-Indicator tells like disagreement warn or foretell of market movements like market changes in direction, if one knows what to look at, like the 5 tells, which we’ll divulge to you later.
Proofs
Flash Crash of 2018 was preceded by a completed Elliott wave structure and technical weakness for 3 whole weeks in Wave 5 before the 24% correction.
Even the February 2020 Covid correction was preceded by completed Elliott wave structure and technical weakness in Wave 5 displayed for three weeks before it’s 35% crash. There is always a leader of market corrections, which is often a commodity. In January 2020, it was Oil that led the charge.
The year 2000 Bear hacked away 48 percent of the SP500 Index holdings from a 400 percent increase that began in 1990. In a 1999 repudiation, Alan Greenspan warned, There is no new economy. (paraphrased). The collapse of the internet fueled rally was unprecedented and yet again preceded by a completed Elliott wave structure, with obvious weakness or “disagreement” painted all over charted Indicators in 1999 and into 2000 before the crash.
And to be clear, I’m not the only swing trader preaching “Learn to see the tells!”
What precedes Every Swing Reversal?
However, what I did not know when I was a young man is that I should remain aware of timeframes and market waves. That I should have correlated one proven tell, which Whooph calls disagreement, with an emulator of human psychology. An emulator which defines and dictates market structure — Elliott Wave.
Well, I do now!
And I didn’t know how relatively simple it is to see and to cite the 5 tells which precede nearly every market crash or correction. Now, I rely on them. I’ve been spanked by corrections, make no mistake. But now, I heed these tells not only prior to a correction, but in swing trades on hourly, daily, and weekly timeframes! So, I’ve learned my lesson.
Market Tells are Integral Parts
Likewise, Chartered Financial Analysts have been frustrated by a market’s failure to deliver on the promise of one tell — divergence — jilting them all the way up the price trend. They expected divergence to predict a market reversal, and the signal had failed them.
“Divergence doesn’t work!” they complained.
Well, the CFA’s would be unequivocally, flatly WRONG. They had unfortunately neglected to integrate market timeframes, as well as intrinsic Elliott Waves into their analysis, and the three possible responses Price allows Divergence.
Happens to the best of us.
Happened to me. — Whooph
Stubbornly intrinsic, thanks to discoveries and clarifications for Wall Street exchanges and traders by the acclaimed Ralph Nelson Elliott, because markets DO in fact move in reliable and predictable patterns, waves in fact, which we now affectionately call Elliott Wave.
This fact of Elliott Wave and the 5 tells now permeate algorithms of market trading bots on Wall Street and globally, and you’d better bet your Aunt Nancy on it! Heed them. Better yet, use them. Or you will surely pay!
And as for the supposed illusive divergence. There are actually THREE possible responses to Price-Indicator divergence (which we’ll discuss). At least one of these was delivered within its proper timeframe all the way up the Price trend. So, divergence works like a charm! It is the single most useful and predictive tool in my bag of tricks as a swing trader.
They Tell and Foretell
I know now to correlate Elliott Wave to various renditions of Price-Indicator divergence which I’ve coined “disagreement”. For that is precisely what is going on in secret spats between Price highs happily vaulting higher, “on air” as it were, and several reliable Indicators, who inevitably, flatly disagree with Price! At the recent Price high or series of highs, plenty of time to do something!
You may already understand that Price has vitals like we traders; we call them Indicators, trace with price until they don’t! Suddenly Price highs and Indicator highs (or lows) diverge. They disagree. The swing trader notices these divergences, because “What precedes every swing or reversal?” They foretell of Price action. THIS is how you Rescue a 401k.
We should all learn market tells, which would otherwise be leveraged at your expense by the Big Money. Retail investors’ and traders’ failure to heed tells of a market crash will surely cost them several opportunities to rescue a retirement plan in your career. And this neglect may unfortunately guarantee its insufficiency for your retire.
Rescuing a 401k
Indicators are every bit the blood pressure and pulse of Price in delivering signals and tells in ALL timeframes if you can imagine that. And imagine “seeing” them. Imagine saving your 401k on the backs of these friends.
If you’re needing to SELL so you might be able to reposition advantageously 30% lower at bargain prices, not only to catch up but to retire at all, would it be worth the temporary angst? Especially after a fabulously bull rally?
All the while, such rescue of a 401k from a fortune eating monster is relatively simple. Considering that market dives like 2000, 2008, 2018, and 2020 will slash your invested savings by 30% per event, likely three times over your career. 2018 was a flash. 2020 was a quick V. But the 2000 bear took 8–10 years to recover! “This is a good point,” you say. Speed of recovery is noteven the point here! Seizing an opportunity to lock it in reset and reposition after having enjoyed a rather good run…is the point.
Nevertheless, it is for each person to decide for himself. A financial planner may advise, as I have for my kids: “Leave it alone, keep saving. Time is on your side.” This leave it alone practice is “Buy and Hold” tact. And it’s ain’t for everyone.
If your income is moderate and your rate of savings is insufficient. Well then, at least know there is other strategy besides the Buy & Hold. You might just double that 401k over time simply being mindful of 5 Tells as market corrections hit. Just like you’re mindful of saving in the first place:
If Sold and Repositioned advantageously 30% lower at bargain prices:
$250,000 x 1.30 x 1.30 x 1.30 = $549,250
You catch up. You double your retirement nest egg.
Otherwise you are likely unable to retire.
There’s angst in selling one’s 401k equities at the supposed top. I get that. But learning to read a few market tells may one day become the norm. And it may just be worth that bit of angst, to rescue your cash and reposition it near the bottom after the crash or even 30% lower — seized opportunity.
Summary
If a single market seems random, it’s not. What it is, is a simultaneous continuum of intertwined waves in all timeframes: minutes, hours, days, weeks, and months — in a stock chart. But Investors, lest you Swing Trade for Income as I do, you’ll only need to visit once a month, one chart: the two-year Weekly Chart for the Market Index etf’s QQQ or the SPY.
I swing trade these market signals and tells which present in ALL timeframes and have now for going on 25 years, since 1999. So, I can vouch for them, “tells” which the Big Boys cannot hide, are not just hocus pocas “magic” — However, magical is their consistency.
Thank you for reading! — Whooph