Recession, US Dollar Implosion, Uncontrollable Inflation. Stack Your Panic Room with Cans of Tuna!
This morning I woke up to a reputed news podcast, interviewing a reputed analyst forecasting the implosion of the US dollar. America has scarce room to grow even bigger, he argued.
At the beginning of the week, I bumped into a thread in an investing forum, where it was being advocated that the dawn of capitalism is close after the invincible secular bull run the S&P 500 has been through.
Oh! And Michael Burry is suddenly becoming very popular again.
Well! I have no crystal ball, but I've been through the books. I've devoured them actually and I can tell you that the end of humanity, the forecast of the definitive crash of the stock market, economy, and the dollar are nothing new.
These are quite regular premonitions actually. And .. They tend to make the news. We don't like uncertainty.
We tend to become irrationally exuberant in times of prosperity and excessively fearful in times of uncertainty that follow.
Well! I must tell you that, no matter what is coming ... we've already been through a lot worse.
What I brought you today is a sober perspective into the S&P 500. The charts are excellent tools to provide us with clarity ... no noise, no inflated opinions, no conspiracy theories, no useless economic theories ... just what there is.
KEY INTAKES:
1. Clean bearish structure with a neat series of lower high and lower lows;
2. In a downtrending market, the bias is to look for bearish setups once the price hits value zones;
3. The volume profile analysis of this market discloses the heavily congested areas where the bears (above) and the bull (below) could be sitting;
SIGNS OF STRENGTH
1. RSI Bullish divergence in the weekly timeframe;
2. Momentum structure no longer predominantely bearish;
3. July's bullish recation is not the quite and shy bullish reaction one would expect during a downtrend. That candle is roughly 1.8x bigger than the previous 14 candle average;
SIGNS OF WEAKNESS
1. We are in a bear market, in a downtrending market. Trends take a lot of capital to reverse.
2. We do not have clear cut, conclusive signs of an official reversa. Just signs of a momentaneously weakening trend;
3. There's a strong bearish Marubozu and a equally strong bearish Engulfing candlestick patterns in this market;
4. Steady rejection of the 10 EMA and the downward sloping trendline.
NOTEWORTHY FOR FUTURE REFERENCE
1. RSI Bearish divergence calling the top of the last bull market. How much money would this have saved you?
A BULLISH SCENARIO
1. Price cuts above the 10 EMA;
2. Swing traders ought to take profits, totally or partially at the overhead obstacle zones. Always provided it's a trade which makes sense from a risk to reward perspective.
3. Trend followers and longer term trade, could use the breakout from these areas to build their position.
4.This scenario is proven wrong in case there is a breakdown and close below the underneath support/demand areas.
A BEARISH SCENARIO
1. Price cuts below the current support zone and prolongs the swing low into new lower lows.
2. Proximal obstacle: 50 EMA
3. Next obstacle, provided the first one is overcome: $3.3-3.4k.
4. This scenario is proven wrong once there is a 10 EMA breakout and close.
=========
Sexy right? Well, let me reinstante in case you scrolled down at the beginning: I have no crystal ball, I make no forecasts, or whatsoever. I have no clue about what the market is about to do. That's not the job. The job is to learn how to spot favorable risk to reward and probabilityies' friendly scenarios ... and just pull the trigger when they present themselves ... systematically.
You are responsible to discover your edge and understand what complies with it and what doesn´t.
Don't be a Ape!
Cheers,
Ruben
This morning I woke up to a reputed news podcast, interviewing a reputed analyst forecasting the implosion of the US dollar. America has scarce room to grow even bigger, he argued.
At the beginning of the week, I bumped into a thread in an investing forum, where it was being advocated that the dawn of capitalism is close after the invincible secular bull run the S&P 500 has been through.
Oh! And Michael Burry is suddenly becoming very popular again.
Well! I have no crystal ball, but I've been through the books. I've devoured them actually and I can tell you that the end of humanity, the forecast of the definitive crash of the stock market, economy, and the dollar are nothing new.
These are quite regular premonitions actually. And .. They tend to make the news. We don't like uncertainty.
We tend to become irrationally exuberant in times of prosperity and excessively fearful in times of uncertainty that follow.
Well! I must tell you that, no matter what is coming ... we've already been through a lot worse.
What I brought you today is a sober perspective into the S&P 500. The charts are excellent tools to provide us with clarity ... no noise, no inflated opinions, no conspiracy theories, no useless economic theories ... just what there is.
KEY INTAKES:
1. Clean bearish structure with a neat series of lower high and lower lows;
2. In a downtrending market, the bias is to look for bearish setups once the price hits value zones;
3. The volume profile analysis of this market discloses the heavily congested areas where the bears (above) and the bull (below) could be sitting;
SIGNS OF STRENGTH
1. RSI Bullish divergence in the weekly timeframe;
2. Momentum structure no longer predominantely bearish;
3. July's bullish recation is not the quite and shy bullish reaction one would expect during a downtrend. That candle is roughly 1.8x bigger than the previous 14 candle average;
SIGNS OF WEAKNESS
1. We are in a bear market, in a downtrending market. Trends take a lot of capital to reverse.
2. We do not have clear cut, conclusive signs of an official reversa. Just signs of a momentaneously weakening trend;
3. There's a strong bearish Marubozu and a equally strong bearish Engulfing candlestick patterns in this market;
4. Steady rejection of the 10 EMA and the downward sloping trendline.
NOTEWORTHY FOR FUTURE REFERENCE
1. RSI Bearish divergence calling the top of the last bull market. How much money would this have saved you?
A BULLISH SCENARIO
1. Price cuts above the 10 EMA;
2. Swing traders ought to take profits, totally or partially at the overhead obstacle zones. Always provided it's a trade which makes sense from a risk to reward perspective.
3. Trend followers and longer term trade, could use the breakout from these areas to build their position.
4.This scenario is proven wrong in case there is a breakdown and close below the underneath support/demand areas.
A BEARISH SCENARIO
1. Price cuts below the current support zone and prolongs the swing low into new lower lows.
2. Proximal obstacle: 50 EMA
3. Next obstacle, provided the first one is overcome: $3.3-3.4k.
4. This scenario is proven wrong once there is a 10 EMA breakout and close.
=========
Sexy right? Well, let me reinstante in case you scrolled down at the beginning: I have no crystal ball, I make no forecasts, or whatsoever. I have no clue about what the market is about to do. That's not the job. The job is to learn how to spot favorable risk to reward and probabilityies' friendly scenarios ... and just pull the trigger when they present themselves ... systematically.
You are responsible to discover your edge and understand what complies with it and what doesn´t.
Don't be a Ape!
Cheers,
Ruben