last week, the day after Christmas we have had the best one day show in about 10 years in the market. But it was not convincing, why? because there was so small rise in the number os stocks going above the 50 days SMA in S&P 500. On the big day it went up by 3.39 which is insignificant compared to the drops (look at the big red candle o Dec 4th – one day drop of 23%!!)
also checking QLD – we see that on the same close at 12/20 the OBV was 56 million and on 12/26 the OBV was 53 million. this is divergence and hence the market is going to go down further.
on the COMP 6630 is the next resistance (weekly low on the week of Feb 5th 2018)
One positive thing is the DMSI – quoting them “The Delta Market Sentiment Indicator (MSI) declined to 7.5% this week. The range on the Delta MSI is from 0% to 100%. A 7.5% reading is very low and a sub-10% reading has only occurred during four periods (including this week) in the past 15 years (a longer history is shown this week instead of the usual 12 month review). Historically, the stock market has shown strong performance over the next twelve months post a sub-10% reading.”
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
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
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
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
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 $S5FI this is a reliable portent.
For market bottoms Growth stocks are first to break out after a follow through day.
Follow-through signals are more likely to fail if distribution days occur in the first few days of a new uptrend. This is one key red flag. A distribution day, which points to institutional selling, involves a drop of 0.2% or more in the Nasdaq or the S&P 500 in higher volume.
Generally, a distribution day within a few days of a follow-through leads to a failed rally. The risk drops off sharply after the fifth day.
A second red flag? In the early stages of a new uptrend, strong action among leading stocks is crucial. Top-rated stocks should be breaking out of bases in big volume. This is a clear sign that professional investors are stepping back in to buy stocks.
have a wonderful day and please vote!
Price is the true north star and her sisters are a few – one particular one is how many stocks in S&P 500 are above their 50 days SMA ($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
The delta market sentiment indicator is at 19.6 currently.
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