Stock Market Crash Day 7 Market Breaks Last Trendline Support

Today was a very key day in the stock market and the sp500.  Today we broke down through with conviction what I consider to be the last remaining supportive trendline of the advance since March 2009. Not only was this line broken with a wide price spread, but was also done with volume conviction.  It … Read more

Stock Market Crash Day Four and Five

Today’s market action sure felt like we either had a Fed decision or options expiration, but this was not the case at all.  It was simply slow sloppy directionless Monday in late June trading.

I think the market today succeeded in keeping most bears and bulls completely clueless about what the next direction will be. 

It has seemed as though in recent days that most if not all of the bearish bloggers I follow and other traders have turned neutral to long this market.  Or they have closed out shorts and are waiting for 1150 or October 2010 before re shorting this market.  My personal take is that neither of the above two will happen.  My take is still that this market will collapse in the days and weeks ahead based on my indicators, chart pattern analysis and tape read of this market.

I can come up with plenty of reasons why this market could rally from here from a technical standpoint right now (at the bottom of a swing trading range, relatively low volume decline, oversold readings, full right shoulder not formed yet, poor seasonality for a new decline etc etc.)  But I can also come up with a good bunch of reasons why the market could still collapse from here as well.

By the way it is nice to see that Bill McLaren on CNBC Friday sees very similar to what I see coming.  He mentions about a move to 1040 and then a big one day bounce and then a total collapse after that.  Actually I see instead a move down in the market the correlates with 14 day RSI (relative strength index) getting to 30, then a big one or two day bounce from there and then a total collapse.  The most concerning aspect of this forecast is the fact that he actually came public with it on CNBC from a contrarian standpoint.

Read more

Stock Market Crash Day Four

It seems as though a lot is riding on tomorrow’s price action.  As of today’s 6/24/2010 close it would seem that everything is lined up for a hard down weekly close as I indicated before was an important requirement to continue the crash scenario.

But when I look at the current sp500 trading channel on an intra day chart one can clearly see that as of today’s close we are in a spot were a huge upside bounce could come in.  In addition 1076 is about where a 61.8% fibonacci retracement comes in from the June 8th, 2010 low.  So there is some support and enough reasons to cause a big bounce.  This really is a key area we are at right now.

So the issue is, do we bounce dramatically tomorrow early on and then fail at the end of day for a weekly close near the bottom of the range ?  To me that would be the most ideal scenario going into the supposed bearish Astro Monday the 28th of June, 2010.

Closing weekly hard down right before the weekend has a way of allowing the market to build up energy over the weekend to accomplish a break of important support (in this case) or resistance.

So clearly the most ideal scenario for those bearish on the market is a close near the 1050 range tomorrow.  Already being down 4 days in a row makes it seem unlikely we would get another down day tomorrow.  However I have seen many times markets run up repeatedly 5,6,7,8 or 9 days in a row to the upside in the most bullish environments, so why can’t the market get a string of 5,6,7,8, or 9 days in a row of downside moves ?  It is possible, but not highly probable.

Read more

We are in the 11th Hour Now

My call for a stock market crash seems to have almost turned into an obsession.  And to be quite frank uttering the words obsession and stock market in the same sentence is never a good idea. 

This site is supposed to be about finding the best risk reward trade setups.  I have to be honest and say that if I just started to look at the market today for the first time in many months I would have to say that there is really no trade to be had.  The indices look very messy right now, we are situated in ‘no mans land’ right in the middle of a big trading range.  Those are the areas where it is usually wise to completely avoid taking a position because a lot of the time it will just boil down to a 50/50 probability you are right.

But since I started talking about stock market crashes so much I am already standing very deep in this mud and need to finish what I started. 

I am going to write a few more times about it with the following qualifiers:

  • The market MUST close next week HARD DOWN and preferably near 1040-1050 on the sp500
  • The market MUST at the very latest start to turn down hard by 2:15PM on Wednesday of next week (June 23, 2010)
  • Preferably the market will be down BIG (2 to 3%) this Monday, June 21st.

If we do not see all three of the above conditions met starting next week then my days of writing about crashes and collapses are over.  So this may be my last ‘crash post’ I ever write depending on how things shape up next week. I will write about other stuff though (like going long AAPL at $275 maybe? 🙂 )

Why am I doing this ?

Because I feel as though we are in the 11th hour now.  Based on all the indicators and the whole spectrum of different markets I look at it all boils down to next week for me.  Next week is the ‘decider’ as George Bush used to say.  If things do not start to fall apart next week very badly then the market will have evaded a dire crash scenario and it will just be business as usual, or perhaps business in slow motion instead of fast motion (ie. fast crashes).

Read more