Inside Market Track: Divulging The Secrets That Foretold This Hard Sell
I have traded for well over a decade. That means in the trenches, often over twenty trades every single day, seeing every tick up or down on the stock market and individual stocks. I have witnessed buy programs, manipulation and other shady practices along with the major tops in 2000, 2007 and today. Seeing it all for well over a decade made it very easy to spot key signals which is what I spotted recently. I literally warned everyone who I could, over the past few weeks. I talked about it on the radio every day for the last two weeks, as well as writing countless articles, while putting out short trade calls on stocks and the market for my members. All those that listened are enjoying the rewards.
1. The major signal that caught my attention was the 1,850 S&P 500 level. This was the high on December 31st, 2013. On January 15th, 2014, the market popped briefly above that level intra-day but COULD NOT close above that level. Just this past Tuesday, January 21st, 2014 the S&P opened sharply higher, into that same 1,850 level and fell dramatically. It was clear this was a major pivot point on the market. A blind man could even see it. As long as the markets remained below on a CLOSING BASIS, investors should be very bearish. This was contrary to the overall media hype on the major bullish side.
2. The fact that the market was smoked down every time we kissed the 1,850 level spelled out classic distribution. Distribution is where the institutions are selling while the little investor is buying. This has been going on for some time now and could be seen clearly since the start of the year.
3. Margin is being maxed out (all time highs). Margin is the amount of money being borrowed by retail investors (smaller investors) to buy stocks. The last time this hit an all time high like these days was in 2007. The time before that? The year 2000. Scary stat! In addition, mutual fund money flow has reached epic levels again (shows small investors buying). In other words, the small investors are back in this market in a major way and institutions are selling. Which way do you think this market is going?
Ultimately, the struggle at the 1,850 level was how I pinpointed the sell off within these first few weeks of the new year. I told my members the market was going to make a big move this week. With the Dow Jones Industrial Average down over 200 points today, I would call that a big move.
As scary as it may be to hear, the markets are entering a new cycle...one where downside becomes more prevalent. Expect bounces along the way, but the downside will continue.