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I have talked about fundamental factors in previous posts that point in the same direction. This post is almost 100% from the chart.
- The NYSE has been making a series of lower highs since January 2018 (The Dow and the S&P 500 are smaller samples of the market and have been making higher highs of late),
- Even the Swing high (which is well below the all-time high) of 13,261.770 set in Sept 2018 wasn't able to be broken last month,
- My target is a 1.618 extension of the price action between Sept 2018 and July 2019 which sits right around a key support level from April 2011,
- The one major fundamental factor (I am ignoring worsening of the trade war here) that happened since my last posts is that the Fed dropped rates 0.25% (taking interest rates back below the inflation rate - back to negative real interest rates) and the market reacted by selling-off. If you look into previous market cycles, the Fed normally dropped rates BEFORE the price drops started. This seems to be more of a key signal to the market that hard times are upon us, as opposed to the intended support of the markets. The monetary policy experiment of the past 10 years hasn't worked unfortunately. Expect interest rates to trend to zero - and possibly below while the world moves to save-haven assets.
My target is NYSE at or around 8500 level in the next 6 to 18 months. This isn't the end of the world, it is just the market heading for more reasonable valuations while the world deleverages significant debt levels.
I have talked about fundamental factors in previous posts that point in the same direction. This post is almost 100% from the chart.
- The NYSE has been making a series of lower highs since January 2018 (The Dow and the S&P 500 are smaller samples of the market and have been making higher highs of late),
- Even the Swing high (which is well below the all-time high) of 13,261.770 set in Sept 2018 wasn't able to be broken last month,
- My target is a 1.618 extension of the price action between Sept 2018 and July 2019 which sits right around a key support level from April 2011,
- The one major fundamental factor (I am ignoring worsening of the trade war here) that happened since my last posts is that the Fed dropped rates 0.25% (taking interest rates back below the inflation rate - back to negative real interest rates) and the market reacted by selling-off. If you look into previous market cycles, the Fed normally dropped rates BEFORE the price drops started. This seems to be more of a key signal to the market that hard times are upon us, as opposed to the intended support of the markets. The monetary policy experiment of the past 10 years hasn't worked unfortunately. Expect interest rates to trend to zero - and possibly below while the world moves to save-haven assets.
My target is NYSE at or around 8500 level in the next 6 to 18 months. This isn't the end of the world, it is just the market heading for more reasonable valuations while the world deleverages significant debt levels.
Trade active:
Gold set a new 6 year high today, silver has woken up from $13.90 lows in Nov 2018 to trade over $16.30 today. BTC is up 27.8% since its swing low at the end of July. Funds moving out of equities towards cash have accelerated. I guess the move to safe havens has started.
Trade closed: stop reached
Comment:
Trade wasn't successful, however, let's see if my target zone is hit. I wouldn't call it a "buy zone" given what is going on (which wasn't forseeable when the chart was published.
Comment:
The trade didn't work out - but the target was reached for other reasons. Unfortunately, this virus struck at a time when the economy was already over-extended and over-indebted.