2 dangerous sell signals in the market

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look at the above chart of QLD – nasdaq 100 Double . both the 55 days SMA just crossed the 208 days SMA from above and also the 10 days EMA crossed the 22 Days SMA from above (rather bounce).

My expectations is that market is going to fall further.

NASDAQ is just above the critical 7000 level we have had triple top

NQ has a a shorting opportunity at 6800 level

 

yield curve inverted market crash

i am not a predictor of the market, neither do i have any crystal ball. but the last post accuracy has been immediately proved in the market on Tuesday December 4th 2018. wow, what  fall!

IBD narrates – “At one point in the session, a 2.78% yield on the five-year note dropped under a 2.80% yield on the shorter two-year note. In other words, it made less sense for investors to hold the longer-dated bond for a specific return.”

usually the 10  year is compared with 2 year curve. But this is telling. Market need something to sell.

IBD continues – This was supposed to be a banner week for the Dow Jones industrial average and the broader stock market. President Donald Trump called off his escalation of China tariffs days after Fed Chairman Jerome Powell traded his hawkish talons for a Santa rally cap. But financial markets just aren’t buying the good cheer.

so i will either short or stay out of the market

preserve our capital and profits at all cost! Market is in correction.

then they my be a possibly to play an other day

making money in a down market

when market falls it does so quickly.

Now you see in the previous posts how all macro signs pointed this right before 10th October 2018.

it can be found in three parts – part 1  part 2 and part 3

now i made money during this fall (anyone interested to see the proof, please contact me at exlporingdesh at gmail dot com ) or leave email address in  comment section.

how does one make money when market declines.

there are three straight forward ways  A) buy an inverse ETF like QID. B) buy puts on NASDAQ or C) short NQ futures.

Only B has limited risk limited reward.

Let me show you how

happy trading travelers

 

Lessons learnt in market crash – Part 2

Hello travel traders

Good morning from Hyderabad India. Nov 6th is a big day for the USA. it is sunny at about 10:00 am here.

Part 1 can be found here

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FFTY is the growth stocks ETF. It is passively managed fund and tracks the IBD 50 – The best growth stocks in the market. the holdings are updated weekly

you see, Growth stocks break down about 2 – 2 1/2 times that of market. as the market is falling they hold up well for 3-4 days and are resilient. But they start collapsing the faster as the bear market sets in. Why? because market drops 4 times faster then it goes up – because markets climb the wall of worry and fall of the cliff.

Look at the bearish engulfing candle stick pattern at the  tops – a solid red candle after a small green one.

Along with $S5FI this is a reliable portent.

For market  bottoms Growth stocks are first to break out after a follow through day.

Follow-through signals are more likely to fail if distribution days occur in the first few days of a new uptrend. This is one key red flag. A distribution day, which points to institutional selling, involves a drop of 0.2% or more in the Nasdaq or the S&P 500 in higher volume.

Generally, a distribution day within a few days of a follow-through leads to a failed rally. The risk drops off sharply after the fifth day.

A second red flag? In the early stages of a new uptrend, strong action among leading stocks is crucial. Top-rated stocks should be breaking out of bases in big volume. This is a clear sign that professional investors are stepping back in to buy stocks.

have a wonderful day and please vote!

 

Lessons learnt in market crash

S&P 500 Stocks DAILY Above 50-Day Average BEFORE FALL

Price is the true north star and her sisters are a few – one particular one is how many stocks in S&P 500 are above their 50 days SMA ($S5FI)

The first big red candle and a drop of 10 percentage points in the number of stocks above their 50 days SMA happened 12 days  before the actual market crash!

Market lost its floor on October 10th and you see in the above chart that the big red candle appeared on 9/24.

Do you see the gradual descent in the above chart! It falls below all the Moving Averages (MA)..the green 10 Days Exponential MA and also the 22 days SMA and 55 days SMA.

It falls below 50 % on 10/04.

there are other signs that go along with this. More in the coming days posts.

now a drop of more than 10 points in $S5FI occurred  in 4 days by 02/01/2018 and NASDAQ dropped to the low 765 points in the next 6 days!

Similarly $S5FI dropped more than 10 points on 02/27/2018 and NASDAQ dropped to the low of 246 point in the next 3 days.

similarly in 4 days by 03/15/2018 it dropped by more than 10 points and then in next 11 days the NASDAQ dropped by 676 points!

and it dropped by more than 10 points in 4 days by 6/19/2018 and in the next few days NASDAQ dropped 362 points

and it falls by more than 10 points on 9/24/2018 and NASDAQ drops 1000 points in the next 18 days!

I am staying in cash

 

 

 

Where is the stock market now

The delta market sentiment indicator is at 19.6 currently.

Screen Shot 2018-10-20 at 11.14.55 AM

the percentage of S&P 500 stocks that closed below their own resepctive 50 days SMA has fallen to an extreme of 15 % (out of say 100 stocks, only 15 stocks are above their own 50 Days Simple Moving Average (SMA))

According to Delta newsletter – “Since January, 2009 through today, we have only had eight instances when the MSI declined below 20%.  Shown below is a chart of the MSI since January 2, 2009.  Buying the market when the MSI dropped below 20 previously during this bull cycle has benefitted patient investors willing to incur heightened market volatility”

When the Delta MSI drops below 10%, Delta’s MSI based strategies may buy stocks.  During the current bull cycle beginning in 2009, this has happened only twice.  Over the past 27 years, it has happened five times.  These times were:

  • August 1990
  • September 1998
  • July 2002
  • October – December 2008
  • August 2011

The chart below shows the price change in the S&P 500 from the closing monthly price when the MSI went below 10% to twelve months and three years later.  The chart does not include the additional benefit of dividends during the holding periods.

Be prepared to enter soon into the market

 

5th straight week of bearishness for the market

Both the 50 day SMA and 7200 level has been a good resistance for Nasdaq (pic 2 below)

Last week The S&P 500 came to within 4 points of its 200-day moving average, currently around 2,609.

It has now at the end of the week an Accumulation and distribution scale of D. the worst in the scale of A-E is E.

Look at volume – above the last 15 days but it has not budged Thursday and serious plunge on Tuesday. On Friday despite the wonderful slaughter of analysts expectations by AMZN stock.. AMZN actually declined by the end of the day !!

Amazon and Intel staged ugly reversals.

Amazon gapped up 7.9% but then retreated to a 3.6% gain. Intel rose 5.1% and then erased everything to close with a 0.6% loss.

Next The rising 10-year rate is causing the yield curve to steepen.  In the past week and a half, the spread between the 10-year and 2-year treasury rates increased by 32% from 0.41% to 0.54%. Investors have been worried about the flattening of the treasury yield curve and the potential for a yield curve inversion (2-year treasury rate greater than the 10-year rate).  An inversion of the yield curve has been a reliable signal that the economy is approaching a recession.  Investors have also been worried about rising interest rates. (Source of this para and below pic is Delta market sentiment )

Sidelined for now – the picture is getting uglier