Is a bear market on the best way?
by Chris Vermeulen of The Technical Merchants
Is a bear market on the best way? My analysis suggests the downward sloping development line (LIGHT ORANGE within the Each day/Weekly SPY chart beneath) might proceed to behave as stable resistance – probably prompting an additional breakdown within the markets for US main indexes.
As we’ve seen just lately, information and different sudden occasions immediate very massive worth volatility occasions within the US main indexes. For instance, the VIX just lately rose above 30 once more, which exhibits volatility ranges are presently 3x greater than regular ranges.
INCREASED VOLATILITY & THE START OF AN EXCESS PHASE PEAK SHOULD BE A CLEAR WARNING
This elevated volatility within the markets, coupled with the elevated concern of the US Fed and the worldwide unknowns (Ukraine, China, Debt Ranges, and others), could also be simply sufficient strain to crush any upside worth traits over the subsequent few months. Technically, my analysis suggests the $445 to $450 degree is essential resistance. The SPY should climb above these ranges to have any probability of transferring greater.
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Until the US markets discover some new assist and try to rally again in direction of current highs, an “Extra Section Peak” sample will possible proceed to unfold all through 2022. This distinctive worth sample seems to have already reached a Section 2 or Section 3 setup. Please check out this Weekly GE instance of an Extra Section Peak sample and the way it transitions by way of Section 1 by way of Section 4 earlier than getting into an prolonged Bearish worth development.
Learn this analysis article about Extra Section Peaks: HOW TO SPOT THEN END OF AN EXCESS PHASE – PART 2
SPY MAY ALREADY BE IN A PHASE 4 EXCESS PEAK PHASE
This Each day SPY chart highlights my evaluation, displaying the key downward sloping development line, the Center Resistance Zone, and the decrease Help Zone. Mixed, these are appearing as a “Wedge” for worth over the previous few weeks – tightening into an Apex close to $435~440.
If the US main indexes try to interrupt this downward worth development, then the value should try to maneuver solidly above this downward sloping worth channel and attempt to rally again into the Resistance Zone (close to $445~$450). Until that occurs, the value will possible transition right into a deeper downward worth transfer, trying to interrupt beneath current lows, close to $410, and probably shortly transferring all the way down to the $360 degree.
SPY WEEKLY CHART SHOWS CONSOLIDATION NEAR $435 – POSSIBLY STARTING A PHASE 4 EXCESS PEAK
Merchants ought to keep keenly conscious of the dangers related to the broad US and international market decline because the Ukraine warfare, and different unknowns proceed to raise concern and considerations associated to the worldwide economic system. In my view, with the present extra international debt ranges, prolonged speculative market bubbles, and the continued commodity worth rally, we could also be beginning to transition away from an prolonged development section and right into a deeper depreciation cycle section.
My analysis suggests we entered a brand new Depreciation cycle section in late 2019 and are already greater than 25 months into a possible 9.5-year international Depreciation cycle. What comes subsequent shouldn’t shock anybody.
Learn this text about Depreciation Cycle Phases: HOW TO INTERPRET & PROFIT FROM THE RISKS OF A DEPRECIATION CYCLE
Merchants ought to keep keenly centered on market dangers and weaknesses. I anticipated the battle in Ukraine to have been priced into the US markets over the previous 7+ days. Nonetheless, I imagine the markets have been unprepared for this scale or invasion and can try to settle truthful inventory worth valuation ranges because the battle continues. This isn’t the identical US/World market Bullish development we’ve develop into used to buying and selling over the previous 5+ years.
LOOKING FORWARD – PREPARING FOR A POSSIBLE BEAR MARKET
Market dynamics and traits are altering from what we’ve got skilled over the previous 40 years for shares and bonds. The 60/40 portfolio is costing you cash now. Merchants want an edge to remain forward of those markets traits and to guard and revenue from huge traits.
The one method to navigate the monetary markets safely, irrespective of the course, is thru technical evaluation. By following belongings and cash flows, we determine development adjustments and transfer our capital into no matter index, sector, trade, bond, commodity, nation, and even foreign money ETF. By following the cash, you develop into a part of new rising traits and might revenue throughout weak inventory or bond situations.
WANT TRADING STRATEGIES THAT WILL HELP YOU TO NAVIGATE CURRENT MARKET TRENDS?
Find out how I exploit particular instruments to assist me perceive worth cycles, set-ups, and worth goal ranges in numerous sectors to determine strategic entry and exit factors for trades. Over the subsequent 12 to 24+ months, I count on very massive worth swings within the US inventory market and different asset courses throughout the globe. I imagine the markets are beginning to transition away from the continued central financial institution assist rally section and will begin a revaluation section as international merchants try to determine the subsequent huge traits. Valuable Metals will possible begin to act as a correct hedge as warning and concern begin to drive merchants/buyers into Metals.
I invite you to be taught extra about how my three Technical Buying and selling Methods can assist you defend and develop your wealth in any sort of market situation by clicking the next hyperlink: www.TheTechnicalTraders.com
Chief Market Strategist
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