If it wasn't for the FED, we wouldn't get the excellent shorting opportunity lately. Without another QE, markets will sink like a cadaver in the water. Rates may stay at zero forever. It will actually make things worse for the financial sector / banks.
This is a kind of bear market no one in this generation has seen. Yes this first sell off may be bought somewhere below the most obvious spot (SPX 2000), but the type of selling climax we will see at the end of the whole intermediate term move will be astonishing imo.
Gold and other PMs are in bull market because there is no place else to hide in for long term and there is not much upside left in USD. Crude and other industrial commodities will stay sluggish because of global slowdown. We may see some upside in agricultural commodities only if El Niño helps.
I was expecting Monday to be a bigger down day but looks like those
who stand against the selling and bought the dip will be run over in
overnight session. That is why we hold core short position in a
confirmed swing sell off. There is just too much money to make in
This sell off was telegraphed by a few unique indicators we have been following for more than a week now.
this MA crossover indicator derived from short-term RSI of McClellan
Summation Index. I had explained this before, it is now in free fall and
price is following it with a little or no delay.
we had this indicator that spots extreme contango overshoots. I had
also explained what it is and how it works in conjunction with VIX
today I want to show you another unique indicator that works like a
clock in this bear market. As you know, transportation is the leading
sector of this bear market. It leads on the downside and on the upside.
It shows relative weakness at the tops and relative strength at the
bottoms. This indicator measures the correlation between SP500 and
Transportation index. When the correlation between the two drops
significantly towards the zero line, this means transportation index
wants to move in the opposite direction of SP500. Since Transports lead
SP500, we can expect the overall market to reverse its direction to the
direction of the transportation index when the two indices decouple. As I
was pointing out over the last few trading days, transports were
showing extreme relative weakness which caused a sell signal measured by
Transports failed at the horizontal resistance coming from a previous
breakdown point and the index jumped back inside the falling wedge.
Of course there are weekly and monthly bearish setups that can dominantly effect any other setup
Russell 2K continues to be my favorite short among all major indices
Crude oil may find a temporary support right here but this has nothing to do with stocks as they decoupled long time ago.
addition to our core short positions in ES and TF and long position in
VX, I will be looking to short more TF and ES on a rebound as we are about to
see the initiating power move which is the most lucrative portion of this corrective swing sell off
We will likely open below the red line
tomorrow, that gap should take us to the bottom line quickly. In other
words today may be a trend day.
April 5, 2016 at 2:44 pmby
Russell 2K is breaking down, I am trying to maximize profits by
shorting intraday bounces as I just tweeted another short.
ratio for all SP500 constituents is 0.56, this is something you will
see at the market tops , not on a down day. Small traders are buying the dip with no fear
and that means we will likely see a swoon into the close as they puke.
I will close todays short positions at the close today and keep core shorts.