Crash Day 3 Coming? Appears unlikely but inconclusive. Only 1 of my charted crashes had a 2nd or 3rd crash day that finished up strongly like today, although some crashes had this type of rally with a bigger intraday reversal lower. With the day before FOMC announcements apparently accounting for 50%+ of bull market gains and an extremely unique Fed situation and my weekend preference for a rally into Tues/Wed and a low risk position, perhaps I should not worry, but I'm human and excuses are for losers, right? With FOMC announcements being typically followed by odd spikes, I'm loathe to stick with SPX 1914 as my crash elimination level especially if it is reversed quickly, but that's what the historical charts tell me and one can always get short again later if a downtrend and technical indicators re-align.
Putting SPX 1909/1914 to the side for a moment, when you look at various 20-year market charts, it's hard to envision the rally going much higher (1-3%??? 1920s/1950s???) if the longer-term outcome intends to be bearish. SSEC/China is perched on the edge of a cliff with numerous lows from CY2007-2014 looming 10-20% below. Indexes more representative of the entire market don't look good. NYSE already sustained a break below its CY2007 high and is now back-testing the potential H&S breakdown level. Wilshire 5000 has not breached its CY2007 high, but it is back-testing its CY2014-2015 lows after a potential H&S breakdown. Same thing for Russell 2000. SPX, INDU and DAX look like indices that could rally a little further in terms of chart "look" but other markets/businesses could make that difficult. Perhaps oil is the wild card since it certainly has room to rally, but it is also likely targeting $22-26 soon for reasons I described earlier. HYG high-yield bonds have rallied to their downtrend line, so there is a potential catalyst imminently. Seems to me we are at a scary decision point, and whoever can make an obvious significant break in one direction or the other (3%+???) will likely win the next 10%+ move (more if on downside).
The System would not have reloaded yet after dropping to a 75% position size at 1904 from the 1880 entry point. It would require a reversal below 1877 to exit. Good fortune.
Overall Crash Target Range SPX 1166-1666
1666 = 2082* (small -20% crash)
1332-1374 = 2082 * (common -34-36% crash)
1166 = 2082 * (larger -44% crash size seen in CY1929-1932)
Hello S2 what you think if we have a spike to 193.ish after the fed and than down to start the crash...is it possible or the 1914 level delays everything to late february/March?
ReplyDeleteGio, I think the next 2-3%+ move in either direction will give us the answer. The risk is still there, but I'll discuss it in a post shortly. Initial Fed reaction muted.
ReplyDeletePerfect double top at 1916...and then down. I fully trust in your crash study and i hope today is day 1 of 18 down.
ReplyDeleteLooking for 133..ish and 100% short. Thank you for your great job. I really appreciate what you do on this blog.
Gio, me too. 100% short. Thanks for the complement, but of course I could be wrong and I recommend you use a stop suited for you. I hope things work out for you.
ReplyDelete