Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Stock Market Analysis: Baying for Blood

Stock-Markets / Financial Markets 2018 Feb 07, 2018 - 06:31 AM GMT

By: Abalgorithm

Stock-Markets

The wall street bear has woken up. The Dow Jones Industrial Average posted its largest-ever, single-day point decline and major indexes in the U.S., Europe and Asia gave up their gains for the year.The Dow briefly dropped nearly 1,600 points. Although it quickly pared losses, the blue-chip index closed down 1,175.21 points, or 4.6%, to 24345.75, its largest one-day percentage decline since August 2011.

At the time of writing the futures were further down to 2550 from the close of 2639. That is an important level of support. However we expect it to be tested.


SP500 Futures

SPX Index

Monday’s selling was broad-based, with all 11 sectors in the S&P 500 posting declines. Bank shares slid, sending the KBW Nasdaq Bank Index of large U.S. lenders down 4.9% and extending declines after posting its steepest loss of the year Friday. Declines in shares of oil-and-gas companies also dragged on major indexes. The S&P 500 energy sector shed 4.4%, while U.S. crude oil declined 2% to $64.15 a barrel. The fall was further painful for retail investors because enthusiasm for stocks led investors to pour a record $102 billion in January into mutual funds and exchange-traded funds that invest in equities globally. But cracks emerged last week when government bond yields jumped to four-year highs, raising fears among some investors of a faster-than-expected pickup in inflation. The selling that resulted was broad, sending everything from shares of energy companies to banks to technology giants lower.

Meanwhile, a measure of expected swings in the S&P 500, the Cboe Volatility Index, shot higher, jumping 117%—its largest one-day percentage gain ever.

VIX has hit a new high for the year at 37 after averaging under 12 for over 4 years. We had reported in our previous post about VIX headed higher. It had painted a floor and there was only one way for it go. UP!

We are abalgorithm has been alerting clients to the possibility of a severe correction. The data coming out of US has been weak as opposed to strong. Many main stream news outlets have been reporting data to be deceptively strong however the F-indicator at abalgorithm that tracks 100s of economic data points had shown significant weakness. Stock markets had diverged from the economy for over 3 months but stocks generally tend to the fundamentals with some delay.

Given the sharp fall in equities, we see strong correction back higher even possibly to 2700. But that may take a few weeks to materialize.

AAPL : Bull market bell weather

AAPL has broken below the 200 DMA. The uptrend of the last one year is over. However expect a reaction higher from broken trend line to challenge the previous highs.

Treasury Yield: Flight to safety

US10Y yield broke below 2.7 %. Money is flowing to safety out of risky assets. There is a flight to safety and hence we as trader need to align ourselves to the new normal.

F Indicator

US economy has been consistently trending down in terms of fundamental data releases. However stock market has been diverging from fundamentals and rose to record highs. Ultimately we believe fundamentals will impose itself.

GOLD

USDJPY downtrend intact

USDJPY is in bear market for over 5 months. USDJPY moves into bear trend only when markets are not bullish about equity risk over long term. The pair seems to be showing no interest in moving higher which leaves further downward continuation a possibility.Short on a break of 108 to 106.

BITCOIN

Bitcoin has corrected as expected. The correction has been severe as we noted in our previous analysis . Then prices were at 8300$. We were waiting for longs below $6000. We have reached near $6000 and we will be watching for lower time frame to see if bottoming happens. The fall in Bitcoin was in regard to regulation around the world however BITCOIN has become a tradeable asset as CBOE launches bitcoin futures. Therefore it will be just as regulated as any traded asset. So expect BITCOIN to form floors at important support 6000 before going long.

STOCK MARKET INTERNALS


The putcall ratio has risen to new yearly highs.


The number of stocks trading above 50 DMA has fallen to 690 stocks. The number was well over 1000 last week.


The number of stocks trading over long term uptrend lines of 200 DMA has fallen to 1300 from 1900 last week.

As observed the market internals have deteriorated significantly while the fundamental economy has finally started to impose on the stock markets. The market correction is simply a reflection of reality and correction of an overpriced market. The flight to safety with treasury prices rising and yields on 10 Year falling along with movement of capital to utility ETF suggests that smart capital does not expect long term bull market revive in the first 6 months of 2018. However we do expect some strong bounce in equity markets into MARCH which will be bounce of supports

About abalgorithm
abalgorithm.com operates an automated forex trading system which copies trades to its clients around the world. Our clients are able to reap the benefits of a class superior trading system along with industry leading research. We also host the F Indicator which is a fundamental indicator tracking all major economies.

Here is the latest equity snapshot of the trade copier service

The system has made +67.5% return since November launch averaging over +20% a month. It trades over 30 pairs including exotics like USDSEK. Trading system uses advanced concepts lie hedging and machine learning. All you need is a MT4 terminal and decent capital to trade. You can apply here: Contact US

About Us
abalgorithm.com is a quant based research and trading firm. We operate a high performance FX trade copier service which uses Machine Learning as its core. You can check the results here: TRADE COPIER 3 MONTHS REPORT: +53%
More performance reports
In addition, we operate a LIVE TRADE ROOM along with daily indepth research and manual trade calls. Clients and guests can have a lively discussion of the state of the world economy and trading opportunities.

To join our trade copier: Fill the form

About Abalgorithm.com
Abalgorithm operates an automated quant forex trade copier and a live trade room for clients who trade forex. We also provide daily research on equities, bonds, ETF, commodities. We are located at http://abalgorithm.com

© 2018 Copyright Abalgorithm - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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