Stock Market Crash Day Four

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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.

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We are in the 11th Hour Now

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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).

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SPDR Gold Trust GLD ETF Looks Ready for a Big Move

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The SPDR Gold Trust GLD ETF looks like it is just about ready for another big move.  Some time ago I did a post on why I thought it was prudent to be cautious on gold because there was at least the potential of a bearish weekly divergence developing.

That bearish divergence has failed to play out.  And now the gold market finds itself in a position where the daily MACD is just about to turn bullish and the gold price is compressed into an ascending triangle.  In addition the weekly chart and the monthly chart still look bullish. 

So I have to tip my hat to the bulls here.  The monthly RSI is right into the powerzone and has plenty of room for upside expansion.

As long as the GLD maintains the current supporting ascending triangle structure I think you have to be open to huge upside moves.

If we see any closing prices below 120 in the week ahead then it would change the near term very bullish outlook and could completely reverse my opinion.  But for now I have to say the GLD has everything going for it to the upside and actually an entry right near these levels with a protective stop at 119 seems like an outstanding risk/reward.

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A lot can happen in 8 Trading Days

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My impression of today’s trading action is more of the same.  We are rallying on fumes (lighter and lighter volume) and it is an urgent warning to me that the market can retrace the rally that began on June 8, 2010 very quickly.  I still doubt that the next leg of the decline will start this week, but I suppose one could say that the heavy volume of options expiration this Friday could lead to unpredictable price action.  My take is that we somehow manage to stay afloat the next two trading days and maybe even blast up in one last ‘hurrah’ to close this week strongly higher.  But then next week ought to start down very hard and be relentless if my accelerated bear scenario is to stay in force.

A lot of price action (or price destruction) can take place in just 8 trading days leading up to the June 28th target date.  It seems too convenient that so many have forgotten the 1000 point 1 hour plunge that occurred in May.  I guess I cannot blame anyone as I cannot remember what I had for dinner last Friday either.  But my point is that this market can once again surprise with a speed that is unthinkable to even the most bearish of bears. 

If the June 17 to 25th, 2010 astro aspects are to have any real credibility then this market should start to show us something dramatic sometime next week and into the 28th. 

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