Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18
Rising US Home Prices and Falling Sales - 8th Dec 18
Choosing Who the Autonomous Car Should Kill - 8th Dec 18
Stocks Selloff Boosting Gold - 8th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Stock Market Crash More to Come

Stock-Markets / Financial Crash May 07, 2010 - 12:26 AM GMT

By: Anthony_Cherniawski

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleDow Plunges Most Since 1987 Before Paring Losses - The Dow Jones Industrial Average posted its biggest intraday loss since the market crash of 1987, the euro slid to a 14-month low and yields on Greek, Spanish and Italian bonds surged on concern European leaders aren’t doing enough to stem the region’s debt crisis. U.S. Treasuries surged.


The New York Stock Exchange told CNBC that there were no system errors during the Dow’s plunge as speculation of bad trades swirled through the market. The Nasdaq OMX Group Inc. said it is working with other markets to review the plunge.

“It’s panic selling,” said Burt White, chief investment officer at LPL Financial in Boston, which oversees $379 billion. “There’s concern that the European situation might cool down global growth and freeze the credit markets.”

Bank Swaps Surge as Moody’s Raises Sovereign Contagion Alert

The cost of protecting European bank bonds from default surged to the highest level in 13 months as Moody’s Investors Service said lenders face “very real, common threats” from the region’s fiscal crisis.

Banking systems in Greece, Portugal, Italy, Spain, Ireland and the U.K. may come under pressure as the crisis worsens, Moody’s said in a report today. The ratings firm said yesterday it may downgrade the Portuguese government and its banks after Standard & Poor’s last week cut the sovereign debt of Greece, Portugal and Spain.

(Financial Times) Analysts said the euro’s breach of $1.30 against the dollar could have an impact on the behaviour of the world’s central bank reserve managers, which could drive the single currency lower still as they pondered its status as a reserve currency.

Diversification of global reserve holdings has been a source of support for the euro in recent years as central banks sought to adjust their portfolios away from the US dollar.

VIX challenges its broadening formation.

-- The VIX challenged the top trendline of its Broadening Formation, closing above short-term Trend Support at 22.15. Yesterday I suggested that the VIX may break above 29.22 in the near future. It closed in the upper half of its weekly trading band and has a potential target of 60.

The CBOE Put-Call Ratio for equities ($CPCE) came down a little at .97 today. Retail investors are now net neutral today. The pros have cut back on the $CPCI to 1.23 (less bearish) at the end of the day. The 10-day average is still high at 1.47. The NYSE Hi-Lo index closed down 129 points today to -125, the lowest level since last March.

SPY back-tests the Broadening Top

Action: Sell/Short/Inverse -- SPY plunged below daily Trend Support/Resistance at 113.50. It bounced off weekly Trend Support/Resistance at 105.00 and remains sandwiched between the two.

The Broadening Top leaves little doubt that the next extension could leave SPY testing 65 by early June.

There are other variations, but for the present, I suggest that an attempt to buy the market may be made tomorrow. If it fails, the circuit breakers may be invoked either Friday or Monday.

The QQQQ tests lower suport at 41.

Action: Sell/Short/Inverse -- QQQQ tested the bottom trendline of its Broadening Formation and took out the February low. The bounce back to 47 was to be expected. It closed at weekly Trend Support/Resistance at 46.60. The next move should take out the bottom trendline of the Broadening Formation. There may not be a retest of the lower trendline once it is crossed. The NASDAQ is investigating the possibility of some erroneous trades made this afternoon.

ZeroHedge is shut down, so there will be no rebuttal. I suggest that this was simply a panic selloff.

XLF continues its decline.

Action: Sell/Short/Inverse --XLF has much further to go to test the bottom of its Broadening Formation. Yesterday I suggested that XLF may decline in a series of 1s and 2s leading to an extended breakdown. It appears that this observation was correct. The bottom of the formation for XLF may happen sooner than early June. Citigroup pleads innocence of erroneous trades today.

FXI took out its February low.

Action: Sell/Short/Inverse -- FXI is in a confirmed bearish trend. The cross of the short-term Trend Resistance below the intermediateterm Trend Resistance confirms the decline as well as the violation of the last Seasonal Cycle low in February makes this decline doubly bearish. The Shanghai market declined 4.11% in overnight trading, confirming the downtrend.

GLD soars in a panic throw-over.

Action: Neutral -- GLD came within a point of exceeding its December high. As it stands, the corrective pattern barely qualifies as labeled. A further push above 118.76 invalidates the wave c and above 119.54 creates a new high. Nonetheless, I am more bearish than bullish on GLD. GLD has a giant wedge formation in the weekly as well as the daily charts, so once it turns, it may collapse. I am simply waiting for it to decline below shortterm Trend Support/Resistance to make a position in it.

USO’s decline continues.

Action: Sell/Short/Inverse -- USO made big headway toward its lower trendline. Given the close proximity of that trendline, I suggest that USO may fall much deeper. Once below 34-35, there is virtually no support for USO until it reaches single digits. I am not sure what kind of calamity may befall us, but it appears that there may not be very many using oil later this year.

TLT made a huge spike today.

Action: Neutral --TLT spiked even higher as panic buying hit treasuries. It remained above short- term Trend Support at 91.51.

The cycle pattern is calling for a decline into a trading cycle low in mid-May. It has exceeded the top of its daily cyclical range. The weekly range allows for TLT to go as high as 105, but it may have already seen the top. We could see an inversion of the cycle, where the called-for low is actually a high, but I am not taking any chances of an abrupt and strong reversal at this point.

UUP continues upward.

Action: Buy/Long -- UUP remains above short -term

Trend Support at 24.12. There is a pivot on Friday-Monday that we may want to monitor, but frankly I see no end to the pattern, yet.

The cycles call for a potential low in mid-May but that still leaves UUP an opportunity for another week or so of gains, if UUP continues rallying through its pivot. The pattern and the breakout still support UUP going higher in the short term.

Traders alert:  The Practical Investor is currently offering the daily Inner Circle Newsletter to new subscribers.  Contact us at tpi@thepracticalinvestor.com for a free sample newsletter and subscription information.

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules