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This time is...⏰ Market exuberance:New secular bear market? 🐻Hi mates, stock market is probably near top and next huge market meltdown is next door . Why i think so?I want to share with you some pieces of my analysis: 📌S&P500 vs. Utilities sector ratio It seems it could forecast short and mid term corrections in stock market but it looks like its good indicator of broader market cycles as secular bear/bull markets. A secular market trend is a long-term trend that lasts 5 to 25 years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets; a secular bull market consists of larger bull markets and smaller bear markets. 📌Yield spread Inverted yield curve is leading warning indicator of future recession. The basic principle is whe yield spred inverted (was in negative territory) you can expect recession in next 12-months.It happened when Dot.com bubble bursted in 2000-2001 and so in Great financial crisis in 2007- 2008 as you see in chart. 📌Put/Call ratio The put-call ratio is calculated by dividing the number of traded put options by the number of traded call options. You can use it as contrarian indicator to determine how much Bullish/Bearish the market is. An extremely low ratio means the market is extremely bullish. A contrarian might conclude that the market is too bullish and is due for a pullback. Contrary extremely high ratio means the market is extremely bearish. In my analysis i using 20day MA of Put/Call Ratio an looking up for divergencies. 📌VIX divergence of 20 MA 📌Nasdaq vs Russlel 2000 Just so similar pattern on monhly chart of Nasdaq and Russell 2000 📌Other factors Margin debt acceleration is another sign of speculative frenzy in the market Margin debt is not a technical indicator for trading markets. What margin debt represents is the amount of speculation that is occurring in the market. In other words, margin debt is the ‘gasoline,’ which drives markets higher as the leverage provides for the additional purchasing power of assets. However, ‘leverage’ also works in reverse as it supplies the accelerant for more significant declines as lenders ‘force’ the sale of assets to cover credit lines without regard to the borrower’s position. Here is chart Total market cap of negative earnings of IT firms near $1 trillion its more than 2000 -2001 Dot.com bubble. Source:KailashConcepts If you like the idea, do not forget to support with a 👍 like and follow. Leave a comment that is helpful or encouraging. Let's master the markets together.
AMEX:XLUShort
by Tomasgei
6
Low Risk Weekly DIA Credit Spread (5% gain on capital invested)I'm looking to enter a Put Credit Spread on DIA with the goal of collecting $5-$6 worth of credit per contact with a $1.5 wide spread. I'll be holding till DOE with the intention of growing capital invested by a minimum of 5% for the week. -Current price is: $308 -Credit spread sell strike: $290 -Current price to sell strick: 6.2% -Is price trading above 50 day SMA?: Yes -Is price trading above 200 day SMA?: Yes -Percent OTM if held to DOE upon entering, is: 92% - 94% of being OTM if held to DOE -Technical analysis: DIA is trading above 50 and 200 day SMA which signals that we are in an uptrend. Our sell strick has been placed below .382 (292.5) fib retracement level. This price zone has held as support in the past I'm looking for it to hold again this week. Let me know what you think. Have a nice day.
AMEX:DIA
by zzMOTTS
Low Risk Weekly DIA Credit SpreadI'm looking to enter a Put Credit Spread on DIA with the goal of collecting $5-$6 worth of credit per contact with a $1.5 wide spread. I'll be holding till DOE with the intention of growing capital invested by a minimum of 5% for the week. -Current price is: $308 -Credit spread sell strike: $290 -Current price to sell strick: 6.2% -Is price trading above 50 day SMA?: Yes -Is price trading above 200 day SMA?: Yes -Percent OTM if held to DOE upon entering, is: 92% - 94% of being OTM if held to DOE -Technical analysis: DIA is trading above 50 and 200 day SMA which signals that we are in an uptrend. Our sell strick has been placed below .382 (292.5) fib retracement level. This price zone has held as support in the past I'm looking for it to hold again this week. Let me know what you think. Have a nice day.
AMEX:SPY
by zzMOTTS
S&P 500: Aug 12 1982 defines all rallies including Friday's highAfter all the hundreds of trend lines and channel that I have drawn over the last year, I have finally found the most important channel and trend lines. Believe it or not they all originate from August 12, 1982 and Friday's high hit a key trend line. What is so important about that date. Here is some info from the Wall Street Journal. --------------------------------------------------------------------------------------------------------------- www.wsj.com It was on Aug. 12, 1982, that the Dow Jones Industrial Average dropped to its 1980-82 recession low of 776.92—almost precisely where the Index had closed in January 1964. Starting as a trickle, the decline in inflation and long-term interest rates picked up speed that summer, and investors in common stocks began to have confidence that they were being liberated from the shackles of double-digit inflation and interest rates, an innovation-sapping regulatory regime, and a tax code that was antithetical to capital formation. During that lazy summer, institutional and individual investors came to the conclusion that the back of inflation had been broken. Not insignificantly, they also believed that they had a friend in the White House. When Henry Kaufman of Salomon Brothers said that Treasury yields had reached their highs in a note to clients on Aug. 17, 1982, stock prices exploded. This provided free-market optimists with desperately needed evidence that their principles would provide a path forward. The simple—yet difficult to achieve—strategy of getting the government out of the way and turning the economy over to free enterprise set the stage for a period of tremendous economic growth and wealth creation. --------------------------------------------------------------------------------------------------------------- Now one point is not enough to define a line. We need a second point. Now I don't know exactly where the slope of this line originated, but I can find a clear pattern that exposes the originating line from 1982. It first is visible in May 1986, again in Aug 1989, July 1996, and most importantly during the correction after the dot com bubble July 2002 - March 2003. Defining this as the "Master Trend Line" you can determine the peak of every rally since then. How you ask? Well it is quite simple. You can create a parallel channel with this line, then you can pull up/down the other side of the channel to align the "dotted line middle" with key tops and bottoms of the major rallies. The top of the channel will then give you a very accurate guess at where the next rally will make a peak/top. It also works for corrections. The crash bottom in March 2009 is just an inverted version. What I have done in this chart is starting from this "Master Trend Line" created several channels (using different colors) that align the dotted middle line to key points (color coded crosshair icons). The line up perfectly. In the most basic case you just keep moving the upper channel up in price to hit key lows and highs. That is it, nothing more complex than that. Note the March 2020 low lines up very well with the middle line that established the July 2019 peak. Note that on Friday the S&P touched one of these lines. The channel middle is Feb 9, 2018. The low after the large correction from the super strong 2017 rally. The next most obvious level is the clear set of price patterns around the 2800 level. Setting the middle there moves the channel (orange) up to around 4100-4200. The next peak to align could be Jan 2018 or I think more likely the Sept 2018 peak as it clearly define a pattern through 2019-2020 (red). That would be around 4500-4600. We could align to the pink line that defined the July 2019 peak (dark red). That would be around 4700-4800. That is not all. I have also laid out the Elliott Waves starting at Aug 12, 1982 and used the dot com as Wave 1. The trick here is trying to figure out if March 2020 was the end of Wave 4, which looks like it was to me. Now the question is how much power will Wave 5. Note that since the March low the S&P has already eclipsed the price change of wave 1 ($1448). From a percentage size they are not close but I don't think that matters with waves, just price. One technique I use to estimate Wave 5 if we know wave 3 is this. Assume standard wave 1, 3, 5 with fib levels of 1.0, 1.618, 2.0. In this case we have an guess of wave 3 at an actual fib level of 2.236. I calculate a thing I call the Bull Ratio as 2.236/1.618 = 1.382. Now multiply the nominal 2.0 fib by this ratio. 2.0*1.382 = 2.764. The closest fib to the level is 2.786 @ $4143. That fib level intersects the orange trend line around May. One last thing. Here are my rising wedge pattern and trend lines. Well, that is what I have put together on my Saturday afternoon. Hope it is helpful.
SP:SPX
by Dr_Roboto
13
The importance of being patientWhen I first started trading equities 5 or so ago I was such a greenhorn and eager to make my millions in this game. Little did I know my first year would amount to over $10,000 in losses. Looking back, it was working through each losing grade and aiming to understand why I lost money that helped push me to where I am now. Here are some things that helped me. 1. Biggest thing to do right is to set a stop loss. I know this sounds like common sense but you wouldn't believe how many traders mess up their account by being egotistical and saying "oh well" it will come back up. Well, I'm here to tell you that it most likely will not come back up for while if at all. Most stocks continue a trend until a certain point and that trend reverse. Take your loss and put that money to work somewhere else 2. Position sizing is key. If you have a $1,000 account or a $1,000,000 account never use more than 25% of your total account value on one trade. I personally use 10-15% on each trader so I have available cash to cushion a drawdown. (pros lose too) 3. Stop trading after a string of 3 or more losses in a row. You need to take a step back and look at what may be going wrong. It may be out of your control but you need to verify that and wait to trade when conditions are right. If you are just revenge trading cause you keep losing then you will end up broke. Trade safe and trade smart.
AMEX:SPY
by The_Level_Two
7