In the screencast I show hard evidence from the chart refuting media reports which say that a bull market on Wall Street is back. This evidence is available to everybody.
There has been a bull rebellion over the lat 4 weeks but that doesn't mean that this is a bull market - at all!
If you're a forex trader or stock trader this is important. Why because what happens on Wall street affects currencies and stocks all over the world.
I am clear that I do not recommend trading a weekly time frame to most people. The situation on the weekly is relevant to most of us who trade on much lower time frames. So yes - I'm shorting on lower time frames (which is not a recommendation to others).
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UPDATE: Wall Street has fallen 83 points over weekend of 19th Jan up to 17:00 GMT on 20th Jan 2019. RSI on 15 min time frame was as low as 10 and staying mostly under 30.
Nice analysis but it's not quite in bear market territoru yet. If you were to chart the Dow in terms of Euro, you'll see a completely different pattern. The market stayed within the upward channel and now as the Euro declines, this brings in support even if in terms of dollars the Dow moves sideways to lower.
Everything is so interconnected and there is just too much financial chaos going on outside the USA. Nevertheless, I am in a short position with the stop loss above the Friday high. Low risk-high probability trade IMO.
Captain_Walker
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@Dimolad, Most popular traditional news reports are chuntering about bull market.
I expect a major spike up if the Xi-Trump deal comes to fruition. But Wall Street and other US markets don't rely on just China. It's actually quite crazy how price is moving north when there is so much chaos about - especially debt, interest rates, inverted yield curves, and international political tensions.
So, I have to wonder again if the 'plunge protection team' is actually behind this - working with stealth. If not, it means that loads of hedge fund folk, company buybacks and ordinary folk a simply overcome with greed and hope. And part of the reason for that hope and greed is that 'everybody' jumped when price hit the weekly 200MA. Well, by 'everybody' I mean market exploiters, manipulators and those afflicted by FOMO.
The last 4 weeks of bullish sentiment was indeed surprising - but I know never to be too surprised by the 'market psychosis' as I call it.
The problem for 'everybody' looking back to 1929, 1987 and 2008 was that nobody early in the market instability (on the weekly) was sure it was a bear market. Others looking at the daily time frame might have called it a bear market. The most accepted criterion for bear territory (for Wall Street specifically) is 16% from peak and that has happened already. See 1/2-week chart. The correction was roughly 20%.
Gurus out there vary of course. Some argue that it's 19% while others say 21 or 25%. The overall aggregate of all indicators tell me that the market is in bear territory. So, I don't need to depend on gurus. Wall Street was into parabolic expansion, and one thing I know is that these sorts of parabolic pictures do not simply roll over and die easily.
If the China deal happens (for real), then a push about Fib 61.8 probable. But watch out for geopolitical influences that may affect markets e.g. situations in Italy, France and the UK (threatening stability of the Eurozone – and problems in the Indian and Chinese stock markets. Yes – these too have distant but important effects on American stocks. So, it’s not like ‘what happens in China stays in China’.
Importantly when Wall Street had given up the ghost (temporarily) in the past, on three occasions, the crash came quite suddenly over just a few weeks. What happens is that people then say ‘It’s a crash’. If one is shorting a market like this, it’s pretty useless acknowledging a crash after it happens. If a crash comes it could be much larger than on previous occasions. Why? Because the sort of debt that has been pumping up markets, is like no other ever seen in history. And – keep in mind that the world is far more reactive in the way markets are all hooked up via ‘thuh internet’; much faster than in 2008. In simpler language if you’re excessively top heavy and you begin to lose balance (aka instability), when you fall it’s more likely to be pretty hard and fast.
AlphaWolf-Prime
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Great work Captain.
Really appreciate your efforts and time spent in putting this together for us.
Captain_Walker
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@AlphaWolf-Prime, Nice. Thanks. I do these videos mostly because I need to organise my thoughts. Delighted if it helps others or adds a different perspective.
Everything is so interconnected and there is just too much financial chaos going on outside the USA. Nevertheless, I am in a short position with the stop loss above the Friday high. Low risk-high probability trade IMO.