Lot of people have a vision of a big crash, or at least the end of the bull mkt. Yes it is possible. The question is when and how it will come. Certanly stocks have been trading weak, as I wrote in my prev post also SPX came under pressure. The breath indicators have a lot of problem, HYG got hit, Russell is down more than 10 %, US10y yield down again, etc. But, for example Gold , is struggling to reverse (probably due to the still strong USD). Sometimes correlations work, soemtimes they don't, so let's just have a look at the technical picture.
Daily: Yes, again it looks like the is in a real danger! So is the Kumo, Price seem to be breaking below. But if you look back in time, the same happened in Aug/2014, Feb/2014 Dip buyers always saved it. If we compare these "looked like a break" days, we can see that Slow was pretty much oversold, just like now.
I think sooner or later stock mkts will turn rather , but I doubt they will suddenly collapse. Even in 2007 we had big pull backs before the major selloff. This time I have two scenarios in mind:
A) Price gets down to one of the major lower supports at 1928 or 1898. Then it will be a real signal on the daily time frame, but with high probability by then we will see some recovery from the oversold territory, to retest the Kumo from the lows.
B) by some reason (eg. on back of ECB announcement), greed will dominate and dip buyers reverse mkts from this level.
Anyhow, if you have not yet enterred shorts, selling at current level is risky, and not a good risk-reward. Selling at current level will be a after a pullback from the lows back here, together with indicators giving swing signals.
Weekly: if you look at this chart, clearly hard to envision a collapse :-). Yes, I see that from the three accelerative the steepest is penetrated. Good chance for Price to come down to 1890 or maybe even to 1830-1850, but still that would be only a healthy correction. Bear mkt you can talk about only below 1810. It can happen, but there will be big waves and a lot of nervous trading with a lot of pains on both sides. People just forgot about bigger moves and higher volaitility.
There is a chance for one more dip today, but I think most likely that would be bought again. A close above 1957 can increase chances further that we see the bullish momentum returning. Higher resistances are at 1975 and around 2005. Next big question is even if we see bulls to get back in power, will they manage to reach or cross previous highs or not? As if they fail, then the big selloff will come. I am neutral here, indicators are getting mixed a bit. Just watching for now. Might try to buy some if we retest down to half of yesterday's candle
SPX has very little and thin support holding it up here...
The fed did the same thing in 1929 and the markets looked the same...very few people thought it could end.
This time the global printing caused extreme asset inflation, while the consumer prices still not picking up, or actually in Europe there is a serious risk of a deflation. I think central bankers fckd it up in a big way. But the real collapse will come when the global debt mkts once ever realise the debt is so huge and so much is monetized that basically most of the countries are in default, and the central banks will be in default too technically. Ok, central banks will be able to print money again, but then the "modern" fiat ccy system will once totally collapse. The real endgame will be something new, something totally unexpected, which not even Mr. Soros, or Mr. Dalio can think of now. We will see a strange combo of lot of different meltdowns. My idea is finally that bond holders globally all around the world will loose 50-70 % of their savings on global defaults and commonly agreed debt write down. There won't be any other slution if they will like to save the current fiat ccy system and the "real" economy which has been based on growth of a totally fckd up FMCG (Fast moving consumer goods) system.
That is also fckn insane. Why the fckn hell would anybody need an iPhone6???? What the fck is the problem with iPhone4 or 5? It knows the same, no real improvement. The whole global consumer system is based on pushing the different level of customers hoarding newer stuff, while everybody really knows those are useless. Meanwhile there is a massive "internal inflation". While prices of goods and services don't grow that quickly, the quality of goods and services has been deteriorating a lot in the last 10-20 years. So basically there is inflation, just not in the form of CPI or GDP defl. increase.