Stock Market Analysis

Wednesday, August 28, 2013

Major Market Crash Coming?

The Dow lifted slightly today by 48 points as some limited bargain hunting set in after yesterday's big down day.

Fundamentals
The Dow lifted slightly today largely on bargain hunting as economic data and geopolitical factors continue to worsen. On the economic data front, house data continues to deteriorate after months of great showing with Pending Home sales turning in disappointing. This was on the back of a worse than expected showing on the Case-Shiller HPI yesterday. It is clear from all of the recent housing data that the housing sector is going through a little cooling off period right now and that actually makes investors jittery because a strong house sector is crucial to the current US economic recovery. This along with the huge divide in Crude Vs S&P500, the rush for gold, the pending tapering, the Hindenburg Omen and the Syrian situation sets the market in a decidedly bearish tone. Even though investors did bargain hunt back from bonds into equities, options traders continue to keep total equities put call ratio above par in favor of put options trading, suggesting more downside risk is expected. All in all, there is little or nothing in the fundamentals to give support to the "rally" today, making it more like a bull trap "dead cat rally" than the beginning of a reversal.

Technicals
Deteriorating fundamentals continue to support the technical picture here as the Dow heads strongly towards the June low. From the momentum of the drop and the overall technical picture that led to it, it seems unlikely for the June low to hold. In fact, the patterns we are seeing now so closely mirrors the one back in 2007/2008 that it seems very likely this is the start of something bigger than just a deep correction. We are now seeing the same close double peaks following a year long rally... the very same thing we saw back in 2007. The chart patterns so far completely agrees with the Hindenburg Omen... the kind of setups you get just before huge bear trends or market crashes... so far, I have pre-positioned my Master's Stock Options Picks Subscribers in several very profitable bearish picks as well as a good bullish position on Gold since a few weeks ago. Are you pre-positioned to profit from this?

For now, the Dow remains in short term bear trend within an intermediate neutral trend and primary bull trend.


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