Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
If You Don’t Understand Bonds, You Don’t Understand Investing - 25th Aug 19
Gold's Next Move - 25th Aug 19
Fresh Water Crisis Unfolding - 25th Aug 19
Newbie Guide to Currency Pairs in Forex Trading – Review - 25th Aug 19
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Setting Up for Dead-Cat Bounce or Liquidation Event?

Stock-Markets / Stock Markets 2019 Aug 06, 2019 - 11:05 AM GMT

By: Ricky_Wen

Stock-Markets

The last week of July/first week of August was quite interesting as volatility is finally back. The bears got their resurrection by closing below the ongoing "sh*t hits the fan level" at 2955 on Thursday August 1. Essentially, active traders and investors had to de-risk and go into more defensive positions. The risk-off scenario continues with the price action confirmation below both the key trending daily 8/20EMAs and also the 2955 level. Obviously, a lot of growth stocks and higher beta names got hit hard and the weakness will continue until stabilization occurs.


The main takeaway from the last week of July/first week of August is that the bears/sellers are in obvious control of the short-term when below 2933/2955 resistance levels. The goal lines for both sides are fairly defined going into the next few sessions/weeks as the bulls/buyers are going to try and stabilize around the weekly 20EMA at around 2900 or the 50% fib retracement area of 2880-2870. The ongoing bears/sellers will try to do a straight continuation downside or "hold half and go" setup. Knowing one’s timeframes is very critical heading into the next few sessions/weeks.

What’s next?

The Emini S&P 500 (ES) closed at 2934.5 on Friday, around the middle of the session’s overall range. The current Sunday night price action has overshot below the key ~2900 weekly 20EMA by a little. We’ll see whether it stabilizes by forming a dead-cat bounce basing pattern or a liquidation event into daily 200SMA at around 2790.

As of writing, market is down about 4.3% from all time highs 3029.50 print and based on stats and the structure, we’re expecting some sort of dead-cat bounce soon targeting back towards 2933/2955 that either starts from around 2900 or the 2880-2870 area. If this dead-cat bounce plays out per expectations, it would likely be sold off again as a lower high setup or "hold half and go" down setup on the weekly timeframe (as long as it remains below 2985 given the odds).

However, if there is no dead-cat bounce off these key support levels soon, then traders obviously must be aware of the liquidation event potential heading into daily 200SMA 2790s instead. Please note, bears/sellers are in control right now so any bounce is still treated as a dead-cat bounce.

Current parameters/bias:

  • Higher volatility environment, so the focus should be on the key/extreme levels because the minor levels are more likely to get crushed compared to previous times when the market just handed out free lunches for everybody and their mother.
  • Example: Support1/Resistance1 used to produce easy money setups for morning scalp on range days as we demonstrated, but now it’s more likely to go to Support2,3,4,5/Resistance 2,3,4,5 because of the range expansion.
  • Faster paced, higher volatility market with bigger price range so traders must adjust positioning sizing alongside with wider stops and targets in order to accommodate this overall range expansion for August/
  • Immediate downside has fulfilled the 2915/2900 support level/targets. That is also the area where the weekly 20EMA trending support resides. Barring any surprises, first try basis vs. that important support zone will likely result in a bounce based on stats. If it doesn’t, then be aware of liquidation event like October 2018. (further immediate supports are located at 2880-2870 for the 50% fib retracement)
  • Daily 200SMA currently resides at 2790s. If n liquidation event occurs, then this would be ultimate magnet for the next few sessions/weeks. Please note: if market does target 200SMA in the coming days/weeks, then it would be a 8% drop from all time highs
  • Don’t get married to any viewpoint as new price action data comes into play, short-term traders like us need to activate their maximum flexibility strategy in the ES trading room.
  • We will continue to utilize level by level price action approach and take it day by day. Know your timeframes!

See chart reviews and projections on the S&P 500.

Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.

© 2019 Copyright Ricky Wen - 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.


© 2005-2019 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