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-   -   US and Euro stocks mounting one more rally before crashing? (https://www.forexfactory.com/thread/787890-us-and-euro-stocks-mounting-one-more-rally)

cove Jul 26, 2018 4:52pm | Post# 21

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great thread Cat - thx for continuing to share your insight

ydy high volume drive up through 61.8 looks encouraging

a series of higher lows >23.6 showed the way

your 76.4 target looks good - testing the last significant Lower High (27 Feb) since the drop
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copi88 Jul 31, 2018 2:29am | Post# 22

https://www.zerohedge.com/news/2018-...ggest-february

cat Jul 31, 2018 3:10am | Post# 23

great thread Cat - thx for continuing to share your insight ydy high volume drive up through 61.8 looks encouraging a series of higher lows >23.6 showed the way your 76.4 target looks good - testing the last significant Lower High (27 Feb) since the drop {image}
Good to hear from you cove...long time no see!!

cat Jul 31, 2018 3:26am | Post# 24

Despite the title of this thread, I think an imminent sell off the size of or bigger than that we saw in Jan/Feb is unlikely just now. In Jan, Dow had climbed so far above its Daily 200 simple moving average that a correction was inevitable, and look what it did - fell all the way back down to it almost to the pip. Now, although I think the January high may well be the top for this market, support is much closer, so I feel it'll take much more than mere technicals to bring this down much further just now, another 700 to 1000 pips perhaps, but total crash, and by that I mean 40-60%, not this year. It's coming I'm certain, but not imminently. What I think we are in the process of now is the build up, and the longer this thing ranges and struggles to get up to and above 26,000, the closer we come to the crash I believe is inevitable within the next year or so.

darko2010 Jul 31, 2018 3:38am | Post# 25

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{quote} Despite the title of this thread, I think an imminent sell off the size of or bigger than that we saw in Jan/Feb is unlikely just now. In Jan, Dow had climbed so far above its Daily 200 simple moving average that a correction was inevitable, and look what it did - fell all the way back down to it almost to the pip. Now, although I think the January high may well be the top for this market, support is much closer, so I feel it'll take much more than mere technicals to bring this down much further just now, another 700 to 1000 pips perhaps,...
If Strat taught me anything, it is patience and wait for higher timeframes to show the way.
Now that I look at 2007/2008, I understand better what is unfolding before my eyes. The past never guarantees the future, but a re-test of all time highs before a real descent cannot be excluded
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cat Jul 31, 2018 4:04am | Post# 26

{quote} If Strat taught me anything, it is patience and wait for higher timeframes to show the way. Now that I look at 2007/2008, I understand better what is unfolding before my eyes. The past never guarantees the future, but a re-test of all time highs before a real descent cannot be excluded {image}
I was just going to post something about 2007.8, but you beat me to it.

I'm a great believer in the chart patterns showing the way, and this is what I look for all the time. If the market is about to crash, the warning signs should be there screaming out. The signals in January were exactly the same as we saw with Bticoin - way overbought and hyper extended above its Daily 200sma, and price always comes back to that when it gets too far above or below it for the simple reason that when it does, investors ger jittery, and it doesn't take much for the price to snowball once it begins to fall.

In 2007 on the Dow, the price corrected from its July high by just short of 1,500 pips. It then rallied to new highs, but in doing so, a perfect MACD diversion pattern was formed, and this was a strong sell signal once iot began to come down. It then fell all the way back to its weekly 200sma before rallying back up, but only as far as the 61.8% retrace from the October high. By then, if you use the right moving averages, you'll have seen that the momentum had changed completely on thew weekly, and although no one at the time could have foreseen just how far the price was then going to fall, that 61.8% top in April/May 2008 was a massive sell signal. The price did not stop falling until it hit the bi-monthly 200ema, which, as it turned out, was the buy opportunity of the century!

Looking at the Dow monthly chart now, there is nothing other than the extreme over-extended nature of the price above its 200ema/sma, to suggest that a collapse is imminent, not to me anyway.

darko2010 Jul 31, 2018 4:22am | Post# 27

{quote} I was just going to post something about 2007.8, but you beat me to it. I'm a great believer in the chart patterns showing the way, and this is what I look for all the time. If the market is about to crash, the warning signs should be there screaming out. The signals in January were exactly the same as we saw with Bticoin - way overbought and hyper extended above its Daily 200sma, and price always comes back to that when it gets too far above or below it for the simple reason that when it does, investors ger jittery, and it doesn't...
I don't use indicators but simply looking at the monthly/weekly PA both for Summer 2007 and March 2009 were clear signals to me.

cat Jul 31, 2018 4:57am | Post# 28

{quote} I don't use indicators but simply looking at the monthly/weekly PA both for Summer 2007 and March 2009 were clear signals to me.
The big difference between now and then was the distance back to the bi-monthly 200ema ( I'm using bi-monthly because for me that is the time frame that best shows the big picture. In short, there is a hell of a lot further to fall now than there was then. The major US stocks lost about 45% of their value in 2007-9. The next crash, when it happens, could well see 50-60% wiped off their value. This is why you have to ask, if I were an investor, would I be investing in the US stock market right now? The current extreme volatility of the markets suggests that the answer is a resounding NO.

cat Jul 31, 2018 5:17am | Post# 29

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This is a monthly Dow chart I posted at the end of January. One of the surest signs that the price is about to correct is a sudden burst of aggressive buying or selling. This is exactly what we saw in January. For those who are interested, this is what I wrote at the time...

" Last night was Donald Trump's first State of the Union address, and in it, as expected , he spoke of America's 'booming' economy and the soaring US Stock Market which , from the very first day he won the Presidency, has risen meteorically in the biggest stock market rally in history, though in fact, it did actually begin back in March 2009 when the lows were reached following the 2008/9 financialmeltdown which really gathered pace with the collapse of Lehman Bothers in September 2008.

Ironically however, on the day of the State of the Union address, US Stocks had their worst day since Trump won the White House, falling nearly 500 points, a pretty big single day fall by any standards.

The recent almost frenzied buying of US stocks so far this year is a sign, though no more than a sign, that this remarkable bull run may, and I stress may, be close to running out of steam.

Time will tell, but this is one of the very first signals of an impending correction analysts look for - signs of exhaustion at extremely overbought/oversold levels, and this month's potential ' Death Throe ' candle ( the highest white bar you can see on the chart ) which is far longer than any monthly candle previously, is a potential early indication that the stock market may have peaked, or be close to doing so.

This is exactly what happened with Bitcoin in the run up to Christmas, and whilst many pundits and the mainstream media were screaming ' BUY BUY BUY BEFORE IT'S TOO LATE.. BITCOIN IS GOING TO THE MOON! ', the technical signs that it was about to correct/crash were building, and on the 17th December down it came, crashing almost 50% inside a single week, no surprise to those who read the signs, but a big surprise for those who failed to.

That is not to say that the same thing is about to happen to US Stocks. The Dow Jones Industrial Average and S&P 100 are still very well supported technically in complete contrast to 2008, and they certainly cannot be compared with the extreme volatility of Crypto currencies, but I would say we have just had our first sign that the haymaking could be coming to an end, at least temporarily. Certainly, the Stock Market is currently hugely overvalued and in no way representative of the health of the US economy where massive structural problems remain. It is therefore not a question of 'if' the next financial crash will take place, but' when '.

If you are exposed to US, British or European stocks, best contact your broker/fund manager for a low down, because many investors, especially those who rely on others to invest their money, get caught out when the Stock Market turns south. They did in 2007/8, and they will do again when the next crash happens."


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cat Aug 1, 2018 8:19am | Post# 30

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This probably won't concern most of you, but it looks as if the FTSE is building to come down, wiping out all of this year's gains so far. A succession of very bearish candles on the weekly would be something I'd be looking to sell if this was on a smaller time frame.

We have a BOE interest rate decision tomorrow, so maybe this will be the catalyst. An interest rate rise will be good for the pound, bad for UK stocks for fears that the UK economy is fundamentally too weak, and levels of household debt far too high to support rising interest rates. we shall see.
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cat Aug 7, 2018 2:57am | Post# 31

25,600 is an important level on Dow now. If it can break it conclusively, than my next level will be anywhere from 850-26,000, and that level should provide a real test as to whether it is going to go higher or not.

tzamo Aug 7, 2018 3:47pm | Post# 32

25,600 is an important level on Dow now. If it can break it conclusively, than my next level will be anywhere from 850-26,000, and that level should provide a real test as to whether it is going to go higher or not.
Dear Cat,
Really appreciate you continuing to post your views and insights, thank you. I also expect to see the 25,800/ 26,000 level hit, but I would not be surprised to also see all time highs if 26,580 is broken. I suspect this because I see a gap formed on my chart right at the top just before 26,435 and because price may have to retest the highs before any significant downside from my current experience. One thing for sure, it will return to the moving average eventually. I am using the DJ industrial average chart on TradingView for this one, so I am not sure of the quality of the data.

Kind Regards,
Tzamo

cat Aug 8, 2018 4:33pm | Post# 33

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Dow peaked yesterday at 25,890, forming Nice MACD diversion on my H6 chart and down it came today. I would expect to see the selling continue tomorrow, could potentially be a big down day, but at least the 76.4% fib @ 25,250 should be in range.

Dax is looking less clear, however, there's a real MA squeeze on the Daily, so if it also falls tomorrow there is the potential for a 400 pip drop back down to the 12,200 level.
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cat Aug 8, 2018 4:36pm | Post# 34

{quote} Dear Cat, Really appreciate you continuing to post your views and insights, thank you. I also expect to see the 25,800/ 26,000 level hit, but I would not be surprised to also see all time highs if 26,580 is broken. I suspect this because I see a gap formed on my chart right at the top just before 26,435 and because price may have to retest the highs before any significant downside from my current experience. One thing for sure, it will return to the moving average eventually. I am using the DJ industrial average chart on TradingView for...
You're very welcome tzamo.

cat Aug 9, 2018 3:24am | Post# 35

Dow peaked yesterday at 25,890, forming Nice MACD diversion on my H6 chart and down it came today. I would expect to see the selling continue tomorrow, could potentially be a big down day, but at least the 76.4% fib @ 25,250 should be in range. Dax is looking less clear, however, there's a real MA squeeze on the Daily, so if it also falls tomorrow there is the potential for a 400 pip drop back down to the 12,200 level. {image}
Both Dax and Dow falling currently having pulled back a little during the Asian session. Dax looks to have pretty strong support around today's S1 pivot which I have at 12,555, which is also the H4 200sma which is why it should offer potentially strong support if it gets there. I also have higher potential support around yesterday's low, which is the 76.4% fib level plotted from the low on the 6th August.

The initial Dow support looks to be the H1 200sma initially at 25,442, so whether we get the big falls today that I predicted were possible last night remains to be see. Probably needs to be some catalyst, so perhaps some unscheduled announcement later to drive the markets down, and there's red flag US data at 13.30 UK time.

cat Aug 9, 2018 4:02pm | Post# 36

So, right at the end of the trading session, Dow sees some selling, not the selling I thought we might see, but it is a second consecutive down day, just, unless it puts in a last minute rally. with the Dax support holding well to keep it in its range for the fifth day in a row.

Daily candle is a bearish shooting star on the Dow, which suggests a down day tomorrow, so we'll see.

darko2010 Aug 9, 2018 4:15pm | Post# 37

So, right at the end of the trading session, Dow sees some selling, not the selling I thought we might see, but it is a second consecutive down day, just, unless it puts in a last minute rally. with the Dax support holding well to keep it in its range for the fifth day in a row. Daily candle is a bearish shooting star on the Dow, which suggests a down day tomorrow, so we'll see.
I am on holiday, so no trading for me, but I looked at PA after seeing your post and I wouldn't sell on this daily candle. It may look like a shooting star but its position is not where real shooting stars are. More importantly, I see no selling on the weekly chart yet. In any case, I will watch from afar...

cat Aug 10, 2018 2:42am | Post# 38

{quote} I am on holiday, so no trading for me, but I looked at PA after seeing your post and I wouldn't sell on this daily candle. It may look like a shooting star but its position is not where real shooting stars are. More importantly, I see no selling on the weekly chart yet. In any case, I will watch from afar...
I sold before the daily candle closed and held overnight, so already well up. The H2 200sma is @ 350 so I'll be watching that level closely. This may run down to 200 or so though, or, if it drops through all the support levels on time frames above the daily, it could fall to 24,600 or thereabouts.

Dax is at a big potential support level now @ S1 12,590, so it should be an interesting day.

Enjoy your hols!

cat Aug 10, 2018 3:07am | Post# 39

Dax S1 well and truly blown, so should run to 500 now.

cat Aug 10, 2018 4:08am | Post# 40

That was a very nice drop for a Friday on Dax. Looking at the Daily TF, you can see that 500 should be a pretty strong support level, so we may well have seen the low for the day, and already the price is rebounding quite strongly following that last strong push down to 12,478.


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