$DIA SECOND WAVE - The COLLAPSE... (BEARISH!)
* TAKE AWAY FROM POST: We're expecting to see
- Possible second wave of implosion (DEPENDING ON THE FED'S NEXT MOVE).
- Minimum target is 15% in blue.
Welcome back, it's been a while since we last talked, hope all is well.
Let's get right into this, last time we talked we were trying to short the market ( SPY around 255$ and got stopped out a little over 260$) and got burned on those trades. Now we're back with another potential shorting point caused by the recent exuberance that I'm sure we've all notice. "A win-win situation, the New Normal, This time it's different", fair enough, this time is indeed different. The FED has come in stronger, faster and bigger than ever before and there is nothing to suggest they won't do the same on this next down turn. To be honest, we've under estimated what the interventions could do and so we'd been struggling trying to understand the current market dynamic with all the Government interventions. It's a learning process, but we will get there eventually. That is why we're only looking a pull back (~15%) for now and will update when things develop some more.
Note: With all the money printing and super low interest rates, it's impossible to not have an inflated market in the next year or two; however, we do believe that there is some significant short term pain before the next legs higher to all time prices.
***Let's talk about it...***
Realistically, We still believe that we should see at least 235 and maybe even push down to 220 (2018 lows) max.
But if things get out of hand ( and that's a big if, depending on the virus and Feds actions of course) we could see a double bottom around 180.
For now just take it one step at a time