idle_crane

Potential Reversal for Next Week on Global Stock Markets

FX:SPX500   S&P 500 index of US listed shares
So risk has seen unprecedented dumping this week, and sentiments are overall very negative.

I think these events have ran ahead of an actual financial crisis. At this time, we have seen a complete collapse of anything. Chinese Stock Markets have collapsed before in September 2007, and more recently in June 2015, but the global price dislocation of movements were not of the same magnitude.

This is not to say, that the global outlook is positive, but I am suspicious of an exacerbated follow through on existing moves.

To support this technically, we can observe that on the weekly chart, there is a positive divergence between price and RSI reading of former lows. The same observation can be made in the Nikkei, Crude.

After this week, I think a lot of participants will be increasing leverage on the short side because of the very aggressive looking large weekly marubozu . I am by no means long, but just wish to caution participants that risk sentiments are the most fickle to trade.
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