More Evidence For Major Correction...
The Dow closed lower by 64 points today on worse than expected Durable Goods Orders, Tapering worries as well as Syrian worries.
Fundamentals
US market started relatively softly in the morning due to much worse than expected Durable Goods Orders. However, bargain hunters were quick to dismiss the number as Durable Goods Orders do tend to be very volatile so a single month down really doesn't say much. US market then held on to small gains throughout the day until announcement was made towards the final hour of the market suggesting US action against Syria... which means paying money out of an already soft economy. This, along with possible tapering coming up in the coming months, took all the confidence away from the market as the market plunged decidedly into the red. Investors rushed back to the safety of bonds, depressing bond yields as options traders took total equities put call ratio higher as more options traders took up the protection of put options. On top of all these fundamental issues, the US market is also once again trading at high multiples (PE ratio) typical just before major market crashes. All of these, plus the Hindenburg Omen, are adding on to my prediction that the US market might be in for a big correction this time round with more than enough fundamentals to support my technical analysis...
Technicals
I never expected the relief rally that I predicted the last time would end this quickly. With all technical indicators pointing to a strong short term bear, I have little reason to doubt it. In fact, all of my bearish positions and bullish position in Gold (definitely the go to bull in a bear market) in my Master's Stock Options Picks Service are doing very well. There is very little doubt left that the Dow is going to take out the June low and most likely head towards the 14,000 points area. Yes, bear markets can be profitable for options traders as long as we ride in the correct direction and so far, we seem to be doing fine.
For now, the Dow remains in short term bear trend within an intermediate neutral trend and primary bull trend.
Fundamentals
US market started relatively softly in the morning due to much worse than expected Durable Goods Orders. However, bargain hunters were quick to dismiss the number as Durable Goods Orders do tend to be very volatile so a single month down really doesn't say much. US market then held on to small gains throughout the day until announcement was made towards the final hour of the market suggesting US action against Syria... which means paying money out of an already soft economy. This, along with possible tapering coming up in the coming months, took all the confidence away from the market as the market plunged decidedly into the red. Investors rushed back to the safety of bonds, depressing bond yields as options traders took total equities put call ratio higher as more options traders took up the protection of put options. On top of all these fundamental issues, the US market is also once again trading at high multiples (PE ratio) typical just before major market crashes. All of these, plus the Hindenburg Omen, are adding on to my prediction that the US market might be in for a big correction this time round with more than enough fundamentals to support my technical analysis...
Technicals
I never expected the relief rally that I predicted the last time would end this quickly. With all technical indicators pointing to a strong short term bear, I have little reason to doubt it. In fact, all of my bearish positions and bullish position in Gold (definitely the go to bull in a bear market) in my Master's Stock Options Picks Service are doing very well. There is very little doubt left that the Dow is going to take out the June low and most likely head towards the 14,000 points area. Yes, bear markets can be profitable for options traders as long as we ride in the correct direction and so far, we seem to be doing fine.
For now, the Dow remains in short term bear trend within an intermediate neutral trend and primary bull trend.
posted by Jason Ng at 6:59 PM
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