maccabean
Short

A crash may occur shortly. No, but really!

INDEX:DOWI   DOW Industrials
224 5 4
Here is my logic:
1. Fundamentals don't support record highs. High stock prices don't represent real economic activity. Unemployment. situation still not pre-crises levels yet prices are way above that.
2. Oil             showing lack of demand.
3. US dollar             becoming more expensive. End of low exchange rate.
4. China weakening as well as imports.
5. End of easy money and fed soon to increase rates. The first rate rise in a while will certainly be a shock.
6. Geopolitical tensions with new sanctions on Russia and a new Iraq war vs Isis             .
7. September is a historically the worst month for stocks.
8. We are way overdue for a market correction.
9. Low volatility and consolidation showing breakout is about to happen. I don't think it will be up.
10. Strong resistance about 17100
11. Europe potentially falling back into Recession.

In any case, going short is a good idea as the risk/reward ratio is pretty good. September is historically a bad month but October saw the biggest market drops in 1987             , 1929             and 2001. I'm saying short the market until the end of October I think there is a good decent chance of some good profits.

http://www.thealphagenerator.com
I just also want to mention one other thing. I read somewhere today that retail traders are continuing to buy whilst the big market participants are moving more and more assets into cash including hedge funds and Soros. Insanity!

Beware out there!
+1 Reply
elp maccabean
I think the Aug 8th low needs to hold on the next pullback for price to continue to make new highs. If price does not violate Aug 8 low, could go higher and make new highs, breaks then a bigger correction could be starting. As for Soros , we are the last people to know what he is doing and by the time we do find out the entry or exit has passed, unless one is an insder with him. For all we know he could just be hedging his long possitions? Will be interesting the next few weeks as per price action. Looking forward for your future posts!
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My last pick was the AUD and it was spot on because the fundamentals didnt' represent the real value. It's the same with all US indices. Eventually, the market corrects itself and right now, we are overdue.

Possible Head and Shoulders pattern emerging
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One more thing to note. Stock indexes are levitating at these high levels with lowest avg volume of the last ten years! Complete denial of any possible correction. In these cases once the correction happens, it goes very deep.
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"October saw the biggest market drops in 1987, 1929 and 2001" all crashes were under a Republican President. Hoover, Reagan, & GW Bush. Although a correction of 20-30% wouldn't be out of the ordinary similar to 1998 under the Clinton administration. Probably just a coincidence.
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