FX:SPX500   S&P 500 index of US listed shares
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No 4 Hrs chart this time (that has been bearish anyway, since SPX             is in a corrective move), just daily and weekly charts, to see the big picture.

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 trendline 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 Stoch was pretty much oversold, just like now.
I think sooner or later stock mkts will turn rather bearish , 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 bearish 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 QE 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 good risk reward after a pullback from the lows back here, together with indicators giving bearish swing signals.

Weekly: if you look at this chart, clearly hard to envision a collapse :-). Yes, I see that from the three accelerative bullish trend 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.
2use
2 years ago
I backtested two years back for similar situations and market moves in relation to two other indices on the same periods the SP500 and NAS and DOW were in this place. Unfortunately, i find it pretty hard to reverse after today. Why? WHile DOW and SP are on the edge of their trend and can reverse to some good upside, NAS is too high up - it will need to go down, dragging the other two with it. Its a high chance as high flyers are projected to be a good short by many analysts here, such as NFLX, TSLA, PCLN and so forth. So if they go down on a second sell-off today, well, even -0.5% will make it that indices are crossing the trend line, and that would lead to a micro panic and a further sell-off. But while NAS100 would be in its range, other two are going to be out of it - and that is changing the trend.. so from a clear bull trend we will go to an unknown ( usually called sideways trend. that is a good prequel to the upcoming correction.)

Another scenario - it goes up from today...and up. But for how long - trends for NAS and SP as squeezing, and at some point they will be broken up or down... down we can easily see - but up...i find it hard to believe to break and streamline further up at this point. I don't quite see any particular possible reasons for a shoot up. And looking at the world markets, all of them started to stagnate and loosing ground (except Japan, other markets are not at tops). Spread betting 70% down, and 20% we hold it at this level. my 2 cents :)
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Kumowizard PRO 2use
2 years ago
Thx a lot for this colour! Yes I completely agree with you, these can drive the A) and the B) scenarios.
Bearish pressure will likely stay on US mkts for longer time, regardless the short term moves.
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2use Kumowizard
2 years ago
I have been invested in other markets for some time and while US were doing its ups and down - others were somewhat ok. Now global markets have all been changing trend - i.e. i cant see any great place to put the money to, so i took it out.
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Kumowizard PRO 2use
2 years ago
Do you think cash is that bad to hold? :-) I have been in cash (or let's say floaters with 2-4 % yield in different ccys) for a while. Where I see some possibility later this year or erly next year is probably agricultural products, soft commodoties. There I am looking for a bullish reversal to happen.
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Kumowizard PRO Kumowizard
2 years ago
Also the thing is if you hold cash now, what is the alternative cost? Is that you miss a possible 5 % rally from here vs a 10-15 % or a larger meltdown? Is it better to hold cash, or better to hold equities as buy and hold strategy guys do? I vote for cash.
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2use Kumowizard
2 years ago
I figured it all depends on your goals, hunger, and views. If you want 1 million now, you want to win and you are overly positive - you might stay in and gamble. i try to take out emotions, look at the chart as if i am playing a game, so i try not to worry about losing much as well - but also i take a deep breath and say what it feels like at the moment in general. And seeing what i see, risk reward is 1win:4lose as i see. I would not stay fully invested in this market or higher up. And even when it whiplashes, it won't be a reversal until confirmed - i rather play a confirmed trend, than in an unconfirmed one.
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2use Kumowizard
2 years ago
Not bad, just stating how it is - i was never in so much cash in 2 years...don't know why this time it is so special. Maybe i'm overreacting, but with each step up markets add to risk.
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dib309mar
2 years ago
weekly is the one case i'e expecting. .....carefull this time.
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m3nycpeter PRO
2 years ago
Its always hard to imagine a collapse but when the markets are just controlled by a bunch of drunk idiots who play with monetary policy to make the markets so smooth that they look like Argentina's since its bond default. Its hard for them to see an interruption too:
https://dl.dropboxusercontent.com/u/4309835/blog/screenshots/2014-10-02_0337_MERV.jpg
SPX has very little and thin support holding it up here...
https://dl.dropboxusercontent.com/u/4309835/blog/screenshots/2014-10-01_1943_SPX_Targets.png

The fed did the same thing in 1929 and the markets looked the same...very few people thought it could end.
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Kumowizard PRO m3nycpeter
2 years ago
well, yes partly I can agree, but both in '29 and in '87 the circumstances were a lot different in the real economy. E.G. in '87 rates were high and there was a massive blow in inflation...still no one really knows until today what really caused the market crash, I mean what was the real trigger. '29 was again a different reason for the mkt collapse.
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.
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2use Kumowizard
2 years ago
So where is the safe heaven in this scenario?:) dont tell me its gold
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Kumowizard PRO 2use
2 years ago
Low debt countries ccys. E.g. NOK., maybe CHF.
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Kumowizard PRO Kumowizard
2 years ago
Or maybe no safe haven :-) As finally everything is just virtual :-D
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LudmilaHanania Kumowizard
2 years ago
Very nicely said . And about a possible safe haven , I agree about Norway, since 2008 I moved all cash to a Norwegian bank in NOK, sure the USD is up these days against the NOK, but long term I think I made the correct thing.
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Kumowizard PRO LudmilaHanania
2 years ago
Norway is the opne and only real AAA rated country in the world. They have no debt really, they are quite productive, all their macro figures are excellent. The only pressure on NOK now is coming from Oil weakness. Still, I prefer to hold NOK. Large portion of my portfolio is in NOK now. There is still some positive rate differential compared to EUR, and also to USD. Small carry, but still not bad.
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