Do NOT Enter Longs at these Levels. Hold Mostly Cash.
A lot of people on the media are trying to "predict" bottoms by telling people to enter longs as if once the bottom comes we are going to surge to 35,000 on the Dow. This is the last thing you want do here. There are massive liquidity issues in this market right now in attempt to cover massive margin calls from stock losses. As a result, everything is selling off including safe-havens like Gold and Silver .
In history, every-time Gold and Silver have sharply sold off with equities, this indicates an impending bear market.
Currently, I see absolutely no major support on the DOW until we get into the 23,700 level (2625-2650 on the SPX ). This will be a key level as it has represented a major support level over several major corrections since 2009. However, this doesn't necessarily mean it will hold. The secondary level would be closer to 21,000 and if that level breaks look the hell out.
The point is, you want to remain on the sidelines here and not enter into any longs. With the virus only spreading faster and faster there is no reason to be in this market right now.
All rallies will be faded until the virus is contained. Don't fall into the bull traps.
- zSplit
FAQ
Q #1. What about the late day bounce on Friday. Doesn't that mean the bottom is in?
Answer: No. This was a pension fund that threw over 30 billion in the market in the last 15 minutes. This can happen at any-time and means nothing.
Q #2. What about Shanghai? Its been 'holding up' pretty good even with the virus. Doesn't that mean everything is OK?
Answer: No. Shanghai still has short selling banned and all sell orders over 1 million yuan are banned . The PBOC is also dumping billions of liquidity into their market.
Q #3. I thought Gold and Silver were safe-havens. Wtf is happening and why are they dropping with equities?
Answer: Algo bots must short cover to the nth degree to cover their massive margin call losses in equities. When this happens, precious metals sell-off equally if not more than equities. This has nothing to do with the safe-haven capabilities of precious metals and everything to do with liquidity. The reason this could be extremely destructive is metals only sell-off hard with equities when a bear market is impending. That being said, the bull run is still real for Gold and Silver and will just be delayed 3-6 months; this gives traders a once in a life-time opportunity to buy Gold/Silver at cheap levels - the likely bottom is 1480-1520 for Gold and 15 for Silver.
In history, every-time Gold and Silver have sharply sold off with equities, this indicates an impending bear market.
Currently, I see absolutely no major support on the DOW until we get into the 23,700 level (2625-2650 on the SPX ). This will be a key level as it has represented a major support level over several major corrections since 2009. However, this doesn't necessarily mean it will hold. The secondary level would be closer to 21,000 and if that level breaks look the hell out.
The point is, you want to remain on the sidelines here and not enter into any longs. With the virus only spreading faster and faster there is no reason to be in this market right now.
All rallies will be faded until the virus is contained. Don't fall into the bull traps.
- zSplit
FAQ
Q #1. What about the late day bounce on Friday. Doesn't that mean the bottom is in?
Answer: No. This was a pension fund that threw over 30 billion in the market in the last 15 minutes. This can happen at any-time and means nothing.
Q #2. What about Shanghai? Its been 'holding up' pretty good even with the virus. Doesn't that mean everything is OK?
Answer: No. Shanghai still has short selling banned and all sell orders over 1 million yuan are banned . The PBOC is also dumping billions of liquidity into their market.
Q #3. I thought Gold and Silver were safe-havens. Wtf is happening and why are they dropping with equities?
Answer: Algo bots must short cover to the nth degree to cover their massive margin call losses in equities. When this happens, precious metals sell-off equally if not more than equities. This has nothing to do with the safe-haven capabilities of precious metals and everything to do with liquidity. The reason this could be extremely destructive is metals only sell-off hard with equities when a bear market is impending. That being said, the bull run is still real for Gold and Silver and will just be delayed 3-6 months; this gives traders a once in a life-time opportunity to buy Gold/Silver at cheap levels - the likely bottom is 1480-1520 for Gold and 15 for Silver.
