• 19 days Could Crypto Overtake Traditional Investment?
  • 23 days Americans Still Quitting Jobs At Record Pace
  • 25 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 28 days Is The Dollar Too Strong?
  • 29 days Big Tech Disappoints Investors on Earnings Calls
  • 30 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 31 days China Is Quietly Trying To Distance Itself From Russia
  • 32 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 36 days Crypto Investors Won Big In 2021
  • 36 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 37 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 39 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 39 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 43 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 43 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 43 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 46 days Are NFTs About To Take Over Gaming?
  • 46 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 49 days What’s Causing Inflation In The United States?
  • 50 days Intel Joins Russian Exodus as Chip Shortage Digs In
Stock Barometer

Stock Barometer

Stock Barometer

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend. Our goal is to…

Contact Author

  1. Home
  2. Markets
  3. Other

Potential Sell

Good morning Traders,

As the market vehicles tend to move in sync, we see a potential set up here as we go through our normal timing charts.

(Click to enlarge)

(Click to enlarge)

Stocks approaching a sell and bonds looking to break out.

(Click to enlarge)

The Dollar has been weakening, which has added to the buying in the Qs.

(Click to enlarge)

Gold would be near a top in normal markets, but if we get a sell off, they’re breaking out.

(Click to enlarge)

Oil has been trending lower, which is contrary to what you would expect with inventories shrinking and the dollar selling off. Even oil option writers are betting on upside. Momentum is setting up a bullish divergence.

And moving on too some sentiment indicators:

(Click to enlarge)

This peaking suggests sideways action.

(Click to enlarge)

And the VIX - a bet on volatility - is also setting up a potential top. No one can predict the future, but it’s easy to see storm clouds and that does increase the odds of rain.

(Click to enlarge)

The barometer is not reflecting the bullish action in the market, which suggests a bearish divergence and market vulnerable to a sell off.

So as much as we have the potential for a sell off, if bonds reverse course and head lower, that will create more liquidity - similar to 1999 and that liquidity is seeking returns, so stocks will benefit.

It certainly is an interesting time to see the market narrow in leadership so much and a few stocks responsible for a significant amount of gains. I was actually reviewing some Low Periodic Power Law material to see if we’re setting up for a historic crash. I’m no quite there yet. But there are similarities with the pattern in the Qs.

If we do get a crash, I hate to say it, but I’m betting on more of a 1987 style crash, which will be faster than anything we’ve experienced in some time. A move lower like that sets the stage of breaking some markets. So the period after - the recovery - could also set up the next larger move lower. This is reminiscent to the March 2000 move lower in the Nasdaq, where in 3 weeks, the Nasdaq went from 5000 to 3200. Sure it recovered, but the recovery set the next stage for a move lower from 9/1/2000 to October 2002. The 87 crash was 3 weeks as well, taking the markets from 328 to 216. The difference between now and then is that then we didn’t have the Nasdaq. This time around, we have the crowd gathering into the same ETFs driving the same stocks higher. Ready to lose close to half that value in 3 weeks?

The key to responding will be speed. So after a price point is broken, we will move to a bearish stance. Until then, we’re long and patiently watching.

Regards,

www.stockbarometer.com

Back to homepage

Leave a comment

Leave a comment