Stock Market Analysis

Monday, February 08, 2016

Bearish Year of the Monkey

Happy Lunar New Year to all our folks who celebrate this event! May the year of the Monkey be prosperous and happy for you!

Well, in my opinion, the year of the Monkey is going to be a painful one for most people as it is most likely going to see one of the worst recessions in history. However, the year of the Monkey has been an awesomely profitable one for me and my Master's Stock Options Picks subscribers so far as we are sitting on nearly 100% profits on our put options positions. Will make a full report on this when we close these positions out. Don't miss profiting in this bearish Monkey year! Join my Master's Stock Options Picks service now!

Last week, the S&P500 did exactly what I foretold it to a couple of weeks ago, turning around near the 30MA and nearly completing a primary trend transformation from neutral to bearish. So far, its all been extremely textbook behavior, no surprises at all. But why just nearly? Well, that's because The S&P500 still has to take out the January low in order to confirm the new trend. Interestingly, we see evident strength coming into the market once again at around this level from which the S&P500 staged its dead cat bounce last month, forming yet another bottom hammer candlestick at about exactly the same level. Looking at the internals, we see a huge jump downwards in the bond yields and a huge jump upwards in favor of put options trading in the total equities put call ratio. Trading volume was also an extremely strong breakaway style volume. All of these tells me one thing, that today's bearishness was overdone. Indeed, not even the great market crash of 2008 had the market go straight down when the bearish formation started in January of 2008. The bulls never give up without a fight. However, looking at market fundamentals, the Labor Market Condition Index created by the Feds slumped this month from 2.3 to 0.4, the kind of condition that shouts recession is coming. So, the bulls may actually be fighting in vain. Tomorrow would be critical. If tomorrow end up negative, it would negate this bottom hammer candlestick and move on to completing the bearish transformation. If tomorrow end up positive, we could see another retest of the 30MA. Its 50/50 at this point in time.

Market Crash Timer: RED

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

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