Stock Market Analysis

Sunday, January 31, 2016

How January Ends, So Will The Year?

"How January Ends, So Will The Year..."

This is an old stock market adage I have heard since the day I started learning about the market decades ago (In case you guys are wondering from my young looking photo, I turn 41 this year). January 2016 ended badly, as expected. The SP-500 was down a whooping 138 points or -6.65% in the biggest monthly drop since August 2011. Looking at the high and low, the SP-500 dropped by over 260 points over the course of the month before closing higher in a negative range that is not seen since the great bear month of October 2008. Yes, things looked very bad for January 2016 and if the old adage is anything to go by, this year will go down really bad too.

However, how reliable is this old adage? Looking back in the past two decades, we actually saw that there are insignificant correlation between how January ended and how the year ended. In fact, many negative Januaries closed the year positive too. How was prevalent was actually the market cycle. In a bull cycle, Januaries that closed positive tend to close the year positive, fulfilling the adage. Januaries that closed negative actually tend to close the year positive too, breaking the adage. In fact, the only times negative Januaries actually reliably resulted in a negative year was when it was a market crash year. Looking at these findings, one can easily see that this adage doesn't really stand the test of time but rather depended on the market cycle for its fulfillment. Which means that ultimately, the market cycle is King as I have always believed. Which was the basis for my bear market 2016 prediction I made last year.

(Wanna learn how I read the market cycle? Join my Star Trading System training course now!)

So, January 2016 ended negative. Will 2016 itself also fulfill the prophecy and end negative? I do think so strongly. In fact, I think what is to come is the perfect storm of recessions as many of the factors that individually resulted in past recessions come into play all at once this time. Are you ready for the perfect storm?

Market Crash Timer: RED

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

Wednesday, January 27, 2016

Let The Stock Market Crash and Continue Rate Hikes...

"Let the stock market crash and continue to hike rates as previously planned!" said a renowned economist and Fed chairman candidate yesterday. In fact, there were also advises along those lines coming out of China to "let the stock market crash but continue...".

In fact, even though the FOMC announcement kept rates the same exactly as expected, the market still plunged as the Fed pledged with a 10-0 vote to continue raising rates in a "gradual" manner. This means that even though the stock market is looking really shaky now, the rate hammer is still hanging over everyone's heads. Well, this ties in exactly into the stock market crash scenario anyways so it didn't come as much surprise. Its usually interesting to see how the world starts to provide the reasons for a market crash whenever the time is due for a market crash. A few months ago when I first proposed a possible market crash going into Q4 2015 and 2016, many analysts tried to talk me down by quoting how economic data are strong and that the stock market do not revolve around imaginary lines blah blah blah. But when the time comes, the world always provides the reasons for my "imaginary lines".

So, why are renowned economist around the world telling policy makers to ignore the market crash, in fact, let the market crash, but establish policies for more stable economic growth in the future after the market crash?

This is because all of these people went through the same academic studies that I did... we all know that stock market cycles are inevitable and trying too hard to prevent it from happening only makes it come harder when it does and makes it even harder to recover from because of the unreasonable policies and steps taken in the pointless attempt to prevent it from happening. Yes, stock market cycles are a fact that eludes scientific understanding at the moment. How everything in nature are of cyclical nature still begs more scientific research. But for now, at least in finance we call it "retracement to the mean" meaning everything moves back to a more average level eventually and this returning to the mean occurring periodically creates this cyclical behavior that we observed.

Well one thing about today's drop that I didn't like was how strongly it happened on the back of that FOMC announcement without any real action taken by the Feds yet. Such a strong move on such a strong volume over nothing tells me tomorrow could actually be a positive day and that this dead cat bounce that I mentioned all week long isn't completely dead just yet.

Market Crash Timer: RED

For now, the market turns a short term neutral trend within an intermediate bear trend and primary neutral trend.

Monday, January 25, 2016

Cat More Dead Than Expected...

The dead cat bounce happened right after the occurrence of the dragon tail formation I mentioned last week, right on the dot. However, the cat really looks more dead than expected and the bounce has not been as strong as most people, myself included, have previously expected. This was also why I mentioned in last week's report that:

" would probably be already to late to catch on it for any significant reward vs the risk that you are taking because when the dead cat bounce is done, the market will turn around so hard that you may not have time to react to it and exit your call options or long positions profitably."

The thing about a dead cat bounce within such a strong bearish framework is that because it is so bearish inclined, it could actually be too short to be profitable unless you are an extremely nimble trader.  This is why most professionals take such dead cat bounces for put options accumulation such that even if the dead cat bounce ends prematurely, it will be a pleasant surprise instead. I continue to see this area to be an area of struggle as this continues to be an area in which neither bulls nor bears have attractive entries. In fact, today's trading volume took a dive and closed the second lowest volume for the month. Internals are also divided as investors returned to bonds, taking bond yields lower across the board like all real bearish days but options traders took total equities put call ratio down abit in favor of call options trading. So, this continues to be a confusing area for most people. In fact, I won't also be taking strong positions around this area but to be patient to see how this situation unfolds so that I can ride on the next leg.

Market Crash Timer: RED

For now, the market turns a short term neutral trend within an intermediate bear trend and primary neutral trend.

Thursday, January 21, 2016

Dead Cat Bouncing?

Market closed positive day exactly as I have expected it in my report to paid subscribers yesterday following one of the most significant Dragon Tail Formations that I have seen since October of 2014. I explained what this formation is about and what it comprises of in my report to paid subscribers yesterday so I shall not go into it again.

Just like October 2014, this dragon tail formation is expected to turn the market around significantly and today confirmed that tendency and I have also prepositioned my Masters Stock Options Picks subscribers for this move. Even though this is the nicest dragon tail formation I have seen in quite a while, I  do not think that this time round it would have the trend reversal effect of October 2014. In fact, I think this will start that dead cat bounce I have been talking about all week long and being a dead cat bounce, if you are not already prepositioned for it like my subscribers and I are, then it would probably be already to late to catch on it for any significant reward vs the risk that you are taking because when the dead cat bounce is done, the market will turn around so hard that you may not have time to react to it and exit your call options or long positions profitably. In fact, major index futures are already pointing upwards post market (even though it really means very little to how the market eventually ends up tomorrow). The catalyst may be a better than expected leading indicators which is expecting a very bad number.

So far, the market is playing out a typical market crash prelude, no doubt about it at all. I hope nobody out there is still expecting the market to turn around back into a bull trend... even though that could happen, it is going to take a while... a long long while as this perfect storm recession comprising of almost every factors which individually has caused previous recessions could take a while to blow through...

Market Crash Timer: RED

For now, the market remains in short term and intermediate bear trend within a primary neutral trend.

Tuesday, January 19, 2016

First Positive Week of 2016?

Welcome back from the long weekend!

Well, the dead cat bounce did not happen as I expected last week afterall. This is why I always stick to trading put options / bearish positions within such an intermediate bear trend as the possibilities of continuing downwards always outweighs the possibilities of moving upwards significantly even for only a short period of time. In fact, last Friday, the market did exactly what I predicted two weeks ago, taking out the August low. And as I said then, taking out the August low also means the confirmation of the start of the 2016 market crash, which could become a rather historic event with so many geopolitical and economic turbulence hitting all at once. The world is rarely messier.

Today, even though the market opened strongly, it didn't take long for the bears to take it all away. Indeed, traders and investors alike are selling into every bit of strength now. However, this is when it starts to get VERY tricky. The market is now in that very very strong support zone once again. The region where it bounced from the dead twice before. This time round, with the market this grossly oversold, with the buying strength coming in and the internals actually pointing more bullish than bearish with total equities put call ratio trading in favor of call options for the first time in a long time, I would say this is where a dead cat bounce could really happen. By dead cat bounce, I mean a short term rally that could be two to three days long, which means this could basically end up as the first positive week of 2016. Which means that unless you are an extremely experienced and nimble trader, attempting to profit from this "rally" is not for you. Use it to put on put options at a better price.

So far, this decline along with the hit in the energy sector due to the oil glut, my Master's Stock Options Picks subscribers and I have managed to take a pretty nice 35% profit on QEP put options last Friday. Are you missing out on profiting from this decline? Join us now before its too late! --> Master's Stock Options Picks!

Market Crash Timer: RED

For now, the market remains in short term and intermediate term bear trend within a primary neutral trend. (When will primary trend be turned bearish as well? I will explain this in my report to paid subscribers tomorrow)

Tuesday, January 12, 2016

Dead Cat Bounce Starts...

Exactly as I mentioned to paid subscribers yesterday, the market started its dead cat bounce or relief rally today, closing the market positive despite worsening economic data.

(Yes, I only publicly post my report here every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!)

This was what I said in yesterday's report to paid subscribers...

"...was the formation of my all time favorite bullish reversal pattern being formed... the Dragon Tail Formation. This is basically a formation consisting of a sharp drop ending with a hammer candlestick that makes the whole formation look like some kind of tail. The Dragon Tail Formation basically signal a short term end to a bear trend and that a short term bull reversal / rebound / dead cat bounce / bull trap is going to start right following this formation."

And indeed it was so. The market turned around on the dragon tail formation once again exactly as it predicted.  As I mentioned earlier this week, the second week of each month is typically a technical driven week as traders and investors make sense of the heavyweight economic reports of the first week. This rebound is a direct result of traders accumulating into a grossly oversold condition. In fact, the QQQ was down 7 consecutive days before the dragon tail formation, hows that for grossly oversold... the last time it did such a long stretch was the correction of 2012 and even that signalled the end of that correction. Now, don't get me wrong, this time is different because it happened within the framework of a potential market crash so it would not have the reversal effect it did the last time.

So, the dead cat bounce has started and myself, like so many other renowned analysts, is of the opinion that the market crash would officially begin only after this dead cat bounce has proven it to be a totally dead cat by failing at a critical resistance zone and that should happen within the next few days when the market retests the 20 or 30MA. Very nimble traders could actually use this dead cat bounce for some upside profit or be patient and use it to accumulate more put options at better prices. Of course, successful trading is not about predictions but understanding what condition the market is in at the prevailing moment and watching for key price actions. For me, I would be keenly watching the retest to see if this starts the market crash as I expected.

In fact, my Master's Stock Options Picks subscribers and I took this opportunity to take profit on the put options positions that we put on last week in anticipation of this dive. Did you miss out on profiting the past one week? Or did you actually lose money? Join my Master's Stock Options Picks service now and profit with me!

Market Crash Timer: RED

For now, the market turns a short term bull trend within an intermediate bear trend and primary neutral trend.

Sunday, January 10, 2016

More Downside This Week?

What a week it has been for the first week of January last week!

As if running on a precision clockwork, the US market took a dive on the China slump and the oil glut right from the first day of 2016 in what I have always expected to be the market crash year. Me and my Master's Stock Options Picks Subscribers are also sitting on some nice profits right now. In fact, the market continued to sell off last Friday even though jobs report turned out way better than expected just like how I said it would last Thursday. Yes, a market is truly bearish when such good news is used merely as a means of bailing out of the market rather than buying into it. As the old saying goes, how January ends, so will the year. It may not have been true all the time but it may just be the case this year.

Its the second full week of January but also January options expiration week. Apart from that, the second week of each month is typically a quiet week after the mega economic releases of the first week. Without any major economic releases, week two is typically digestion week. A week of technical driven trading in response to whatever happened in the first week. Tomorrow would most likely see those people who bought into the jobs report early Friday morning bail out today, continuing the downtrend. This is supported by the double overlapping bearish candle that was formed on the ETFs of the 3 major indices. This is usually a very strong short term bearish continuation pattern which basically showed that the bears are still in charge after a failed attempt by the bulls. However, since the market has been down this much so far with the QQQ already making its 7th consecutive negative close last Friday, it won't be surprising to see a bit of an accumulation over the next few days. Maybe just for a day or two. Whatever it is, the bearish framework is strongly in place and so I would take any positive days as bull traps or dead cat bounces.

Market Crash Timer: RED

For now, the market remains in short term and intermediate bear trend within a primary neutral trend.

Thursday, January 07, 2016

Market Crash Timer: RED

I think we are witnessing the start of what will be known to be the China and Oil slump recession. US market continued to dive towards the August low exactly how I told paid subscribers yesterday:

"With 3 declining peaks pressing down and crushing investor confidence, this could even be where it go straight down to the August lows."

(Yes, I only publicly post my report here every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!)

And indeed, the market did continue to head straight for the August lows so far exactly as I have predicted today as Jobless Claims turned in worse than expected. Its a good thing I have prepositioned my Master's Stock Options Picks subscribers with put options on the QQQ a few days ago and are now sitting on some nice profits. This year so far has been wonderfully profitable. So, tomorrow is the dreaded day... perhaps the day the August or October low get tested in one big dive if the jobs report fails to meet expectation. So far, all of the major economic data has been worse than expectation so it is very likely jobs report is going to be so too. Even without the jobs report, the combined effect of the dive in the Chinese market and the nose dive in the energy sector is even to spark a market crash. For two continuous days every bearish stock that turned up on my Star Trading System has been energy stocks and we also took put options position in one and are now sitting on profit too. Yes, this isn't the first time oil has sent the world into a recession. In 1981, a global oil glut sending oil prices plunging the way it is today sent the US market into a one year bear trend. This could be one of those times. I still remembered how the news was about $100 oil and how it could even hit $1000 the way the world is developing back in 2007. See where it is today. Even though analysts love to extrapolate linearly, the market and the economy works cyclically instead that when the time to slump comes, it will find reasons to.

The scary thing about today's move is that it doesn't look overdone on the internals at all! Volume was rising in a healthy manner, bond yields were down gradually as investors continue to return to safety and total equities put call ratio displayed the exact put options trading patterns that we saw back in last August. All in all, it all points to MORE DOWNSIDE tomorrow. Yes,  if you are not already prepositioned like my Master's Stock Options Picks subscribers are, this could be a tricky place to start getting into this.

The pieces of the market crash are almost all in place and I am officially turning up the market crash timer up a notch to RED, which is imminent. 

Market Crash Timer: RED

For now, the market remains in short term and intermediate bear trend within a primary neutral trend.

Tuesday, January 05, 2016

A Completely Uncertain Day...

Did I just mention the China bubble popping two days ago? Yesterday, the Chinese market did exactly that, resulting in a dive in the US market yesterday. I even explained yesterday in my report to paid subscribers how the bullish divergence pattern I identified last week has already played out and has been taken over by a new declining peaks pattern.

(Yes, I only publicly post my report here every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!)

Market today did see the accumulation that I mentioned to paid subscribers yesterday. This was what I said:

"However, today's market action does seem a little overdone, as such, looking at how the market actually found some late strength today, I won't be surprised to see a bit of an accumulation tomorrow."

I also said that any accumulation at this level within such a market framework only makes each positive day a good time to accumulate some long put options. I even dialed the market crash timer up half a notch to ORANGE/RED in reaction to how the China market did since I expect the China slump to be one of the main contributors of the coming recession.

Even though the overall market framework is bearish inclined, this level is going to be a level where the bulls and bears fight it out as it is also an attractive accumulation level for the bulls. Bond yields reflected this uncertainty by barely nudging and total equities put call ratio also retraced to par with equal amounts of call and put trading. My Star Trading System also reflected this sentiment precisely with equal numbers of bullish and bearish opportunities. All of these before this Friday's jobs report which is expecting a worse number than last month which isn't hard to beat. But if it turned out worse than a lower expectation, it could be really bad and this time, we don't have the "avoidance of rate hammer" bullish reasoning for any worse than expected outcome.

Market Crash Timer: ORANGE / RED

For now, the market remained in short term bear trend within an intermediate and primary neutral trend. 

Sunday, January 03, 2016

My 2016 Forecast...

Happy New Year!

Welcome back from the weeks of holiday! I hope you guys had a great time even though I know the only thing holidays like this does is make us less want to work hahaha! With all the holidays behind us at last, its time to put our focus on the market once again!

Its the dreaded 2016 at last. The year which many analysts, myself included, are expecting to be extremely volatile due to the US Presidential Elections as well as the widely expected economic crisis cum stock market crash. So, how are election years typically like?

Well, looking at the past 15 years, there were as many negative years as there were positive years during Presidential Election years with 2 positive years and 2 negative years. As such, there isn't a significant pattern to rely on even though the year after Presidential Election, which is the first year of a new Presidential term, tends to be a positive one. Another pattern we could look towards for guidance for the year is that the year following a negative year tends to be a positive one too. However, this was true only for the non-market crash years. In fact, the 2 negative Presidential election years over the past 15 years were market crash years too. As such, it seemed to suggest that market crashes override any discernable stock market abnormalities.

So, the question really is, is this going to be market crash year?

A lot of analysts, myself included, think so. In fact, I think 2016 is going to spark a global recession. The global situation is becoming increasingly unstable with the bubble popping in China, European centrals banks are running out of bullets and things are not getting any better, US economic data also revealed pre-market crash patterns. Most important of all, the market crash timer says so, according to the cyclical nature of the economy and stock market, its time once again for toxic waste to be cleared from the global economy and the time is right about this year.

Even though I am very pessimistic about the outlook for 2016, this doesn't mean I will stop profiting which ever way the market decided to go to. That's the magic of options, allowing us to profit in either direction regardlessly. Profit with me now in the new year with the last hours of my 50% year end sale now! Check it out at!

Here's wishing everyone a very profitable year ahead!