US and Euro stocks mounting one more rally before crashing?

The Dow has indeed hit its 76.4% from the highs, and reacted to it to the pip. 130 pips down as I type, which is nothing for the Dow, so we'll see how it finishes the day. Looking bearish at this early hour of the day, and Dax already well off the week's highs and looking like there could be a lot further to fall.

I said above that this could be one of the most significant few days in the history of the Stock markets, and I meant it. Time will tell.

ps - just for the record. On October 11th 2007, the Dow, having put in new highs and created strong diversion, halted its northward advance and began coming down.

On the 3rd October 2018, having formed a double top with the 29th January high, the Dow halted it advance and began coming down, also forming diversion, as did the S&P 500.

On the 11th December, 2007, having rallied over 1000 pips, the Dow stopped rising just short of its 76.4% fib retracement from the highs. From that level, the Dow fell 7,300 pips to its March 2009 lows.

On the 8th November, 2018, the Dow, having rallied 2,164 pips off its 29th October low, hit its 76.4% retracement from the highs, from which, at this present moment in time, it is falling.............

It'll be interesting to see if momentum builds up in this drop in the Dow. If it can beak through 26080 with some force then the next waypoint should be around the 25800 area which is the 23.6 retrace off the high of this 7/8 day rally and is an area which has a bit of support from mid October. But there's a strong upward trendline from Oct 30th to break through first.

From here, if it does fall 1000 pips or so, Id expect to see it rally again, and then, the real test will be whether it can get above yesterday's high. If this were to happen, and it failed, then that could be the next really significant leg down, but that's all speculative, right now it's coming off the 76.4% and that's all we need to know. I'm looking at the 2 day chart and the similarities to 2007 are striking, though these recede the further out you look. The monthly 2007/8 had a very bearish technical pattern, but right now the monthly Dow is very bullish indeed, though a top forming pattern is strongly evident. Obviously, one should not fall into the trap of assuming what happened in the past will necessarily repeat itself in a similar fashion. The next few days will be interesting though for sure.

One thing I haven't taken into account until I just remembered what time of year it was, was the possibility of a Santa rally, because there usually is one. This would take stocks perhaps to new highs. As always, time will tell.

.....bloody Santa getting in the way - I want my Xmas present now!

A visual on where we're at in technical pattern terms compared to 2007.

I think that probably where we are now in relation to 2007 is that pull back from the initial Oct high which pulled back before falling again from its 76.4% fib at the end of Oct. I was going to say the December rejection off the the 76.4% fib, which back then, really was the final straw as the market crashed from that point on, but right now, the all important 100SMA is much lower than it was when the price pulled back to the December 76.4%, so the Dow right now is not as advanced as it was then...that 2 day 100SMA ( thin orange/dark blue dash ) really needs to get over the price before we can expect a big drop, as it did in 2007.

Well, Dow is not over 1000 pips down from its 76.4% retrace posted above. Its support is currently my 2 day 100sma. If it breaks that, then I'd expect to see it push down further towards the Oct low. If it does that, then it either smashes through that, or it rallies back up towards the 2 day 100sma, before turning again for the next leg down. All speculative as always, as I never put any certainty on my projections, just what I think may happen.

One thing for certain though, and that is that at this present juncture, the big US and EU stock markets are in a spot of trouble and could be beginning to seriously unwind, as I have so far been following on this thread.

Yesterday, both the Dax and Dow looked as if they were about to really fall over the cliff, but they halted the slump, and rose pretty strongly during the Asian session.

Is there going to be a Santa rally this year, and has it just begun? Technically, I'd say we were due a pullback, so the chances are good. I've got heaps of resistance up there, so I'd say a healthy pullback in the run up to Christmas, and then we turn south again.

Major crash 2019? I'd say yes, in fact, it's already begun.

Santa rally Levels - I'll take a stab at 25,500-800 on the Dow, and around 12,000 on the Dax.

If this is the beginning of a Santa rally on the Dow it's a pretty ragged move so far, without any real momentum compared to previous rallies. Which might suggest that it could fizzle out fairly quickly and leave Santa somewhat crestfallen. Or maybe there's another leg down before it shoots back north.

Yeah, forget the Santa rally, which is purely subjective. Better concentrate on what the charts are showing us, and right now we are rebounding off of my 2 day 200ema, which was always likely to be a big support test. Whether price can maintain the rally remains to be seen, but if it can, then the fib levels marked here on the chart - brown 50%/yellow 61.8%/orange 76.4%, are the levels to watch.

I did say above, as the price neared its 76.4% retrace on Nov 9th, that we could be seeing one of the most significant few days in the history of the stock market, and unless the price can break that level before the next crash, that will indeed have been the case.

Call it what you want, Santa rally or whatever, but Dow is rallying off of this 2 day 200ema. First potential resistance level I'll be watching is the 100sma which lies within the 25,200-300 level. If it breaks above that, then the higher possible turnaround levels I've already marked.

As I see it, this is a pullback before the next leg down, it is not the beginning of the next big bull rally to take the Dow and the S&P higher. I believe we have already seen the highs, as followers of this thread will know. and that this is the beginning of a long and protracted stock market collapse, down 40-50%, over the next two years or so.

The only thing that can prevent this, for now, is if the US launches another round of QE and the Fed reverses its interest rate policy in order to keep the markets propped up.

Wow, just in the time I posted that last post a few minutes ago and now, the Dow just shot up over 200 pips, and is now closing in on my first potential resistance level. Dow just broke 25,200 and looking like it wants 300 today at least.

Obviously the release of the US financial stability report boosted the Dow there, but I can only go on the technicals. Dow has reached its H4 200ema at 25,220, a potentially significant resistance level.

If you look at the chart two posts above, Dow is not up on its 61.8% retrace level yellow marker ) This rally looks strong, but, if this is just a pull back in what may now be a bear market, then it is very likely to stop and turn south again either here on the 61.8%, or further up on the 76.4% ( orange marker ). If it then breaks through that and continues up towards the November high, then my highest level would be 26,000. Above that, well, let's wait and see.

If you have a view on what you think equities are going to do from here, perhaps new highs or more in accordance with my views, please feel free to post them, as I hate it when it's just me, kind of makes me lose interest in continuing with the thread.

Well it's closed above the 61.8 level tonight (from the Nov 8 high) and this rally certainly looks strong enough to get it up to at least the 76.4 level. If that level doesn't turn it south again, then I think the 26400-26450 area will be worth watching closely for a turnaround. I think it's significant that the low of Nov 23 didn't break the Oct 29 low and therefore this pattern may be a large scale A B C rally starting from that low on Oct 29. That's presuming of course that it's not on the way to making a new high - which would leave esteemed market commentators and large fund managers such as Peter Schiff and Ray Dalio with very red faces.

Dow has broken above it's 61.8%, but not by much, abut as you can see from my chart, we now have an H1 and H2 diversion pattern with MACD, which will still be in place even if the price moves up to the 76.4%, which should, if my TA here is to hold any water at all, be a massive test for it. It can still push above the 76.4% towards the Nov high, but really, if it's going to find the resistance to send it back down, around 26,100-200 would be my last port of call. It could still double top of course, but really, with this set up, I think parity with the Nov high will see the price move back up towards the Oct high.

Of course, technicals can only give us the visible patterns which we learn to trust our money with based upon past observation, thay cannot tell us what lies ahead in terms of interest rates decisions and political/economic policies and events, all of which shape the markets, so we'll have to wait and see what happens, and what effect another interest rate rise or lack of in the US later this month has on US equities.

As you say, with all the other factors excluding the technicals coming in to play - the Chinese trade stand off etc, but especially what is now being called the Powell Put after his dovish remarks on the "neutral" interest rate level last Wednesday - anything is possible. And it's getting hard to tell what is probable - the fact that the October low didn't get taken out on the last push down is the main reason behind my thinking in post #235. There must still be a huge number of stops just above that Nov 8 high and if they get taken out that will give price a significant boost. That phrase about the market causing the maximum amount of pain to the greatest number of people springs to mind!

Yes tomase, new highs would certainly leave the likes of Peter Schiff and Co with very red faces. We should have our answer by Xmas though.

I don't actually view the fact that the Oct low didn't get taken out as significant. What is significant the way I'm looking at it is whether the Nov high can be taken out, because if it is, then surely price will challenge the all time high. If it does, then that will also be a massive level technically, with the potential for a very powerful head and shoulder pattern in addition to a triple high, with the Oct high being the left shoulder, the Nov being the head, and the right shoulder being the current price. There will be one hell of a battle between bulls and bears if it gets back up there, not that there isn't already.

I also can't help looking back to the 2 day chart for this time of the year in 2007, and today ( posted above ) as the similarities are remarkable. Then, the Nov low did not take out the August low, which backs up my claim that this recent low is insignificant to future pa, and the price then rose back up to its 76.4%, broke through it briefly, and then fell 2,500 pips to a Jan 2008 low, and this was way before any of the shit, such as the sub-prime mortgage crisis and the banking collapse, hit the fan.

They say history never repeats itself, but these two charts are looking eerily similar. The only one major area of doubt I have is that the monthly Dow chart leading up to the 2007-9 collapse was looking very bearish according to my own MA positioning, whereas today, my MAs still show bullish momentum, albeit it stalled throughout 2018. That said however, just look at how far the price is above its monthly 200ema/sma, and as we all know, sooner or later, price ALWAYS returns to its 200 day moving average.

I see what you're saying with the 2007 comparison - that turned out to be a sloping head and shoulder pattern on the weekly. Also of note is that the price swings this time around (from the beginning of this year) are twice the size of the 2007 pa. So the fact that the monthly/weekly 200sma/ema's are that much further below the current price than they were in 2007 may not be that significant given the increased volatility now versus back then. It took about six weeks for price to drop around 2000 pips from the Dec 2007 high to the Jan 2008 low bang on the weekly 200ema - this time around the distance from the current price to the weekly 200ema is just over 4000 pips. But like I mentioned, the swings in price now are double the range they were in 2007. History may not repeat itself but it does tend to rhyme (as I believe the saying goes). Anyway, I'll just try and trade whatever the charts are showing me.

Big 500 pip gap up overnight off of the positive US/China trade news yesterday, and now the Dow is at a very interesting level. The H2 diversion I posted above has broken down, so forget that, but, these are now critical levels. From here, current price 26,061, up to around 26,200, will, according to me, be the level we turn south again, if, we are going to turn south, as I think once we break above the November high, then the next level to challenge is the all time Oct high,

Should be an interesting week.