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Crash Potential

9/23/2014 8:15:40 AM

Good morning Traders,

I don't often use the word crash when talking about the markets, but we do have a popular indicator that's been flashing a signal for a couple days now. Let's walk through it here.

There are 3 components. First is a market that's trending higher (10 day is on an uptrend). Second is the number of new lows rising above a key threshold. And third is the McClellan Oscillator below zero. The first two are shown in the chart below:

NASDAQ Crash Monitor Chart

And the third is here:

McClellan oscillator NASDAQ Chart

Now the above charts are for the Nasdaq. What about the NYSE?

Crash Monitor Chart

And the third component:

NYSE McClellan Oscillator Chart

Ok, so as the charts say - this condition suggests crash potential for the next 30 days or so. And this indicator is also popular for giving false signals. I included it as part of my research several years ago, but feel it's a good indicator to watch for certain things - like the # of new lows accelerating as the market makes new highs. That suggests something's wrong with the market or there's an underlying shift in the markets going on that can translate to weaker stock prices.

Looking back at the last significant move lower in the market for a repeating pattern (remember, we're trying to identify what algorithms are driving the market - and I believe institutions are trading the stock bond relationship very heavily:

SPY versus Bonds Relative Strength Chart

The 2011 drop came hard and fast. If you didn't react quickly, you missed most of the move and then had to wait a couple months as the market tried to hammer out a bottom.

Note - the charts above are part of our research indicators - over 300 popular and proprietary indicators that we use to build formulas to give us a timing advantage in the market.

Regards,

 


I also want to give you a heads up to some changes here. The potential move in the markets could be very bearish, so I'm working to bring in some traders who an help you profit from the move. First up is Damon Verial, who's heading up the Price Gap Option Trader. You can try his service for $1 by clicking here and using discount code PGO1.

We're also bringing in a futures and forex trader who's also agreed to write a stock trading service featuring his unique skills to help protect us and help us profit from the coming decline, whether or not it develops soon, or next year when the fed starts raising rates (though I expect the market move to precede the event).

And not to mention Gregory Clay, who's only added to his gains since bringing him on several months ago - he still hasn't posted a loss! His weekly income credit spreads newsletter is getting some great press. Here are the links if you're interested:

Weekly Income Credit Spreads $26.95 Gregory Clay's Option Newsletter -
Weekly Income Credit Spreads
WIC1

So with all going on in the market, we'll do what we can to give you the 1) fact based research and 2) profitable advice that will help you profit or at least protect your assets from downside by diversification and proper risk management of trades.

 

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