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-   -   US and Euro stocks mounting one more rally before crashing? (https://www.forexfactory.com/showthread.php?t=787890)

cat Jul 5, 2018 6:15am | Post# 1

US and Euro stocks mounting one more rally before crashing?
 
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The title and the question mark, because nothing is certain in this game, but it looks to me as if the Dow Jones, and with it all of the major global stock markets, may well be pushing up one more time to resistance before turning and putting in some big falls. When? I would say imminently, and by imminently I mean sometime this month or next.

If I turn out to be right, then the warning may alert a few people to be vigilant for what could be a great sell opportunity, and if I am wrong, and stocks continue to sail north beyond the levels on my chart, then no harm done.

The chart is hopefully pretty self-explanatory. 24,700 isn where I see the first level of potentially strong resistance, if indeed it gets that far, and if it does and continues north, then around 25,000 will create a very nice head and shoulders pattern, the left shoulder obviously being the 21st May high.

One more thing to mention is the very bearish monthly shooting star candlestick for June. The price does not always drop immediately after such a candle, it can do for sure, but just as often such a candle can be seen as a forewarning of what is to come.

Feel free to add anything you want to this thread, your own analysis or whatever, all posts are welcome as long as they are constructive. Any abuse or pointless criticism and the poster will immediately be banned from all my threads. Sorry, but after posting on ff for so many years, I've had my fill of smart asses. Serious posters and traders only please.

Also, if anyone wants to give any correlation with what is happening in the forex market or in commodities, then please feel free, as this thread is designed to help, nothing more. Similarly, if anyone has a fundamentals take on how things stand at the moment, whether it supports a big sell off in stocks or not, then that would also be most welcome.

Oh, and one more thing. Look at the 76.4% fib support plotted from the 2nd May low ( short orange line ). I was watching this level and so far the support has held perfectly.
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cat Jul 10, 2018 11:38am | Post# 2

I know this thread created zero interest, which is fine, but for those watching Dow, it's up in that key area now, having got just 55 pips short of 25,000, but high enough to form that head and shoulders pattern I mentioned above. It can still climb higher, the momentum is certainly still up, but that little sharp dip we just saw tells me that other traders are seeing what I'm seeing, and it'll be interesting whether it can now rally back up again to make a daily high, or whether it'll fail and drop back.

One more thing to add, the trend line from the all time high connecting with the 11th June high runs right through the 76.4% fib, so the price could be targeting that.

cat Jul 11, 2018 2:49am | Post# 3

Dow down over 300 pips overnight. Trump dropped a trade tariff bombshell overnight, so just lucky? Well, I don't believe in luck in trading, as the price has an uncanny way of advertising events and announcements that cannot otherwise be predicted.

We'll see whether equities can rebound today or whether there are more falls on the way.

copi88 Jul 11, 2018 3:07am | Post# 4

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My thoughts are that equities have definitely peaked and there are only downside risks at the moment.

  1. FED is in a rate tightening cycle - negative equities
  2. Yield Curve is coming closer and closer to inverting - Signals a recession
  3. DT is enforcing negative economic polices through protectionism. Never have these worked out positively for a countries economy

On the COT you can see that equities have been going up but the large specs holdings have decreased sharply. This is the transfer of ownership process from the smart money to the dumb money. This is why in the press you will be seeing lots of advice to buy the stock market etc . This whole process takes time though. Once they have dumped their holdings there is no one left to buy and we should be seeing a 25% price correction.

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darko2010 Jul 11, 2018 6:05am | Post# 5

Dow down over 300 pips overnight. Trump dropped a trade tariff bombshell overnight, so just lucky? Well, I don't believe in luck in trading, as the price has an uncanny way of advertising events and announcements that cannot otherwise be predicted. We'll see whether equities can rebound today or whether there are more falls on the way.
Cat, have you done any analysis of night movements on the Dow and how they survive when the main market re-opens? I doubt last night's news was earth shattering compared to the general news.

cat Jul 11, 2018 6:19am | Post# 6

{quote} Cat, have you done any analysis of night movements on the Dow and how they survive when the main market re-opens? I doubt last night's news was earth shattering compared to the general news.
No darko I haven't. It really depends on the technical though. The Dow now looks set to climb higher, but on the sub H1 time frames it could continue to fall today. The reaction to the trade tariff news overnight was actually pretty small, 300 pips is nothing on the Dow. It could easily challenge 25,000 today if NY decides to ramp it up again, but the longer it sets at this level the more chance there is of it being sold further down I would say.

darko2010 Jul 18, 2018 3:44am | Post# 7

The title and the question mark, because nothing is certain in this game, but it looks to me as if the Dow Jones, and with it all of the major global stock markets, may well be pushing up one more time to resistance before turning and putting in some big falls. When? I would say imminently, and by imminently I mean sometime this month or next. If I turn out to be right, then the warning may alert a few people to be vigilant for what could be a great sell opportunity, and if I am wrong, and stocks continue to sail north beyond the levels on my chart,...
Looks like price wants to test the 25400 level after all, wouldn't you agree?

cat Jul 19, 2018 4:45am | Post# 8

{quote} Looks like price wants to test the 25400 level after all, wouldn't you agree?
Difficult to say now. 345 is the 61.8% from the all time high, and that sent it back down in June. Looks like it is coming down a bit today, but whether they ramp it up again in the NY session remains to be seen. If it does go higher, and I have no reason to think that it won't, then I have some potentially pretty strong looking resistance around 870 which is the 76.4% fib from the all time high.

I do think though that equities have peaked, and I look upon this as the build towards a major collapse, but I don't see the big one happening this year, maybe not even next. I think the big test will be if the Dow can conclusively break the 76.4% fib. It may well break it, but by how much, as it may want 26,000. If it gets above that, then I think new all time highs are a real possibility. We can only watch and see how things take shape.

darko2010 Jul 19, 2018 4:59am | Post# 9

{quote} Difficult to say now. 345 is the 61.8% from the all time high, and that sent it back down in June. Looks like it is coming down a bit today, but whether they ramp it up again in the NY session remains to be seen. If it does go higher, and I have no reason to think that it won't, then I have some potentially pretty strong looking resistance around 870 which is the 76.4% fib from the all time high. I do think though that equities have peaked, and I look upon this as the build towards a major collapse, but I don't see the big one happening...
My old craft tells me equity values make no sense at all.
The 25400 area is a strong resistance, if price also breaks that, 26000-ish is the next logical destination. Yet, I cannot resolve myself to go long and I will just bide my time until I see an attractive sell PA signal.

On a different topic, have you looked into correlations between US indices and FX?

cat Jul 19, 2018 5:45am | Post# 10

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{quote} My old craft tells me equity values make no sense at all. The 25400 area is a strong resistance, if price also breaks that, 26000-ish is the next logical destination. Yet, I cannot resolve myself to go long and I will just bide my time until I see an attractive sell PA signal. On a different topic, have you looked into correlations between US indices and FX?
I have, and there is a very good book I'd recommend should you want to go into it in some depth. However, too much inter-market analysis tends not to help me much with my trading as I only really trade the Dax these days, plus the Dow when I can get a clear signal, and being a 100% visual trader I trade what I see in front of me on my screens, without paying too much attention to what is going on elsewhere. The bigger the time frame one trades, the more intermarket analysis is useful.
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darko2010 Jul 19, 2018 6:12am | Post# 11

{quote} I have, and there is a very good book I'd recommend should you want to go into it in some depth. However, too much inter-market analysis tends not to help me much with my trading as I only really trade the Dax these days, plus the Dow when I can get a clear signal, and being a 100% visual trader I trade what I see in front of me on my screens, without paying too much attention to what is going on elsewhere. The bigger the time frame one trades, the more intermarket analysis is useful. {image}
Thank you Cat, I appreciate it.
Try as I might, there is quantitative side that remains in me and I am frustrated when I can't make sense of the actions of the market movers across instruments. I will look into this book, I haven't read anything related to trading in a while.

cat Jul 19, 2018 7:34am | Post# 12

{quote} Thank you Cat, I appreciate it. Try as I might, there is quantitative side that remains in me and I am frustrated when I can't make sense of the actions of the market movers across instruments. I will look into this book, I haven't read anything related to trading in a while.
Neither have I, I read them all, well, a good few, years ago, which was a good education, but next to useless for my style of trading. That book is a good one though if you want to try to tie everything together. I have found though, that the less I concern myself with that which I cannot see, the better I trade.

cat Jul 19, 2018 7:41am | Post# 13

Dow is looking very bearish today, in fact it has been building all week, dropping, but pushing up to a new intra-day high each time it had fallen a bit. Not today though I don't think. It is on H1 100sma support right now, which should lift it, but there may well be a good sell opportunity, maybe somewhere between 160-190.

darko2010 Jul 19, 2018 7:42am | Post# 14

{quote} Neither have I, I read them all, well, a good few, years ago, which was a good education, but next to useless for my style of trading. That book is a good one though if you want to try to tie everything together. I have found though, that the less I concern myself with that which I cannot see, the better I trade.
PASR is enough to trade efficiently, I agree.
But I like to keep digging, who knows what I may learn about the world (and myself)?

darko2010 Jul 24, 2018 9:10am | Post# 15

Dow down over 300 pips overnight. Trump dropped a trade tariff bombshell overnight, so just lucky? Well, I don't believe in luck in trading, as the price has an uncanny way of advertising events and announcements that cannot otherwise be predicted. We'll see whether equities can rebound today or whether there are more falls on the way.
The Dow is like Jason in "Halloween"... No matter how much you shoot at it, I won't go down

cat Jul 25, 2018 2:54am | Post# 16

{quote} The Dow is like Jason in "Halloween"... No matter how much you shoot at it, I won't go down
Potential double top coming up at 400 though, and I have a lower possible resistance level at around 350, so we'll see what happens.

darko2010 Jul 25, 2018 5:45am | Post# 17

{quote} Potential double top coming up at 400 though, and I have a lower possible resistance level at around 350, so we'll see what happens.
Yes, looking at the same level as you

cat Jul 26, 2018 2:46am | Post# 18

Now that the double top has broken at 400, it looks like Dow is now set for the 76.4% retrace from the high @ 25,870. I also have a level of potentially strong MA resistance at around the same level, so that's the one to watch for me now if the price gets there.

On the Dax, I have what should be strong resistance on the Daily 200sma @ 12,770, and the price is recognizing it at the moment, or has been since the 18th July when it first reached it.

darko2010 Jul 26, 2018 2:50am | Post# 19

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Now that the double top has broken at 400, it looks like Dow is now set for the 76.4% retrace from the high @ 25,870. I also have a level of potentially strong MA resistance at around the same level, so that's the one to watch for me now if the price gets there. On the Dax, I have what should be strong resistance on the Daily 200sma @ 12,770, and the price is recognizing it at the moment, or has been since the 18th July when it first reached it.
This is what I see for now, I will play it safe as yesterday's moves were brutal
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cat Jul 26, 2018 3:18am | Post# 20

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My latest projection for the Dow.

Dax Daily 200sma level holding as I type
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