• 1 day What’s Next In The Trump vs. Twitter Drama?
  • 2 days Escalating Tensions Could Crush $52 Billion China-U.S. Energy Deal
  • 3 days The Fed Is Printing Money At Unprecedented Levels
  • 3 days How Is The Real Estate Market Handling COVID-19?
  • 3 days Gold Flat As Markets Await Fed Chair Speech
  • 3 days What Is Day Trading And Is It Right For You?
  • 3 days Energy CEOs See Big Payouts Despite Oil Price Crash
  • 3 days Saudi Arabia Is Fighting A War On Two Fronts
  • 3 days 40 Million Jobless As Pandemic Fuels Economic Collapse
  • 3 days What Do India's Latest Reforms Mean For Its Coal Industry?
  • 3 days Copper Glut Continues To Grow
  • 4 days How A Pandemic Made Americans Better Workers
  • 4 days The Trillion Dollar Space Race Crosses Another Milestone
  • 4 days Gold Prices Fall As Stock Market Sentiment Turns Positive
  • 5 days Conspiracy Theories Set Tone For 5G Cold War
  • 5 days Working From Home Will Transform The Energy Industry
  • 5 days The Multi-Billion Dollar Race For A Vaccine
  • 5 days Can Domestic Tourism Bolster Emerging Economies?
  • 5 days Australia Considers $100 Million Investment To Kickstart Mining Industry
  • 5 days Has Re-Opening The Economy Been Successful?
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Chris Vermeulen

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Contact Author

  1. Home
  2. Markets
  3. Other

The “Political Coup” Was Just Initiated In Washington D.C.!

SPX: Short Term Reversal To The Downside!

The financial markets have already “priced in” huge tax cuts, reducing red tape regulations and a massive increase in infrastructure spending.

Perhaps, the markets are now believing that the agenda is not going to occur with Al Green asking for Trump impeachment? This could result in a significant downturn for stocks if it were to unfold.

The SPX index declined more than 1.75% and wiped away about $375 billion in market value. The SPX went from a record close three days ago, to below its 50-day simple moving average on Wednesday May 17th, 2017. Institutional traders view the 50-day simple moving average as very strong trend support. The SPX level at 2407 turned out to be the best the bulls were capable to achieve. Their second attempt to push the benchmark higher failed at 2406, where the bears stepped in.

Financial Markets are Spooked!

There is a slow leak in U.S. stocks. The SPX has more declining stocks than advancing ones during this tight trading range. This is unusual behavior and resulted in lower returns over the following month. Tune in every morning for my video analysis and market forecasts at on all ‘asset classes’ so you know where and why the market is about to move.

The SPX decline on Wednesday May 17th, 2017, was abnormally large, relative to the past 3 years.

These two market warning signs, the “Titanic Syndrome” and the “Hindenburg Omen” are giving a “preliminary sell signal” based on analyses of 52-week New Lows in relation to New Highs on the NYSE. On May 4th, 2017, the Hindenburg Omen was triggered on the NYSE and Nasdaq exchanges. It has a consistent record at highlighting underlying weak market conditions that preceded market trouble. On May 16th, 2017, both exchanges triggered the Titanic Syndrome. This occurs when the NYSE 52-week lows out-number 52-week highs within 7 days of an all-time high in equities within days of the major indexes closing at a one-year highs. Historically, these signals have led to further weakness over the following two weeks. As stocks were plunging, investors are currently panicking out of stocks and into the "safety" of bonds.

Is This The Return of New Volatility?

Richard Haworth, CIO of Capital Advisors, a London-based hedge fund, which bets on rising price swings is quoted as saying, “The market will revert to higher volatility and this could be the start of it. The sharp move this week reflects how low volatility the market was -- how complacent.”

 

(Click to enlarge)

Conclusion:

In short, investors have been overly bullish with virtually no fear that share prices could fall. But this weeks drop seems to have renewed the fear and is cleansing the market by weak investor shares being sold to those who are bullish and willing to hold them for higher prices.

This is normal bullish price action and once this phase ends higher prices should return as we enter the summer months.

The bottom line is that it really does not matter which way the market goes, there will always be ways to profit.

By Chris Vermeulen for Safehaven.com

Back to homepage

Leave a comment

Leave a comment