ChartArt
Short

Worse case scenario: FED + Brexit + Grexit + Apple + China crash

FX:SPX500   S&P 500 index of US listed shares
935 4 16
There are several downside risks which can drag the "S&P 500" down faster than I had wished:

  • FED hikes in June and the market doesn't like it and sells off very fast
  • FED doesn't hike in June and the market doesn't like it and sells off very fast
  • UK citizens             votes to leave the EU, which would create fear of the EU imploding poltically
  • New / unresolved issues with Greece paying back their debt emerge
  • Crude oil             starts to crash towards 30 "US Dollar" again
  • The "Apple" stock breaks the 50 month SMA uptrend which would crash the Nasdaq
  • China doesn't stay above recent lows in reaction to other stock markets falling and then continues to crash even lower

Short entry: Between 2070-2080
Stop loss: 2125
Target: 1810-1860
Comment: Update: The S&P 500 followed my forecast and fell sharply from 2085 points where I posted the chart 7 days (and 5 trading days) ago* to a low of 2049.9. The decline was so fast and steep that the S&P 500 started to get oversold. Due to this the new week began Monday with a bounce back up higher with a brief wick up to 2101.1 points. The overall trend is still bearish though, even with a fakeout higher high on the day of the Brexit vote this Thursday, so I remain bearish over a time horizon of the next 2-4 weeks. I imagine the S&P 500 to decline after around Thursday or Friday or next Monday, marking the time around the Brexit vote the last chance to sell into strength and to go short before a larger decline might begin in July, when traders leave the market to enjoy the Summer.

snapshot


* The S&P 500 was falling so fast last week that when I started drawing the chart it had just fallen from 2095 and when I ready to publish the chart it was already down to 2085 points.
Comment: Update two today:

Path of least resistance is to leave the uptrend channel which started in February 2016. More change in price is needed to stay in the uptrend, meaning if the UK votes to remain in the EU a very fast and large sustained move higher has to follow to render my bearish outlook for the next weeks invalid:

snapshot
Comment: First the only good news :) My chart got featured on TipTV and was discussed by analysts and traders Zac Mir and Alessio Rastani. You can watch the show here: http://blog.tradingview.com/?p=1874


Chart update: 14 days later after posting my outlook the worst case, the Brexit, became sadly true. Based on false hope the market managed to run my original stop loss recommendation at 2125 points though (despite picking a very wide SL this time) with a peak at 2127.6 before it crashed hard Judas swing style once poll results came in.

Because I am bearish since two weeks I'm already looking for a positive trend change, while the world just starts to get bearish after Brexit, with the Deutsche Bank getting hammered down today to a new all time low, while the British Pound which already made 30 year lows on Friday fell to new lows today (Monday). So far it only seems that the S&P 500 is oversold on a short time-frame, but I don't see a bullish trend change - yet.

Before spot opens this Monday in less than two hours the S&P 500 has fallen to 2012 points so far and I expect a test of 2000 points coming up soon. An area where some expect a trend change. Earliest trend change area I see is around 1950-1940 points.

snapshot
In my humble opinion, it is an optimistic worst case scenario. If all those thing happen, I expect a fall down to 1600 or even 1300.
Potential top in SP500
+1 Reply
ChartArt JuanAugusto
You posted this chart interestingly 21 days ago. Brexit happened 7 bars ago on the chart. Today the S&P 500 fell after rising four daily bars in row from a high of 2108.71 yesterday, to a low of 2080.86 today.
Reply
The Apocalypse!!
Reply
The "worse case scenario" is even worse than the "worst case scenario". Actually it was only a typo ;-)
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