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inthemoneystock (< 20)

Predicting The Stock Market Collapse



September 22, 2011 – Comments (1) | RELATED TICKERS: SPY , GLD , UUP

The stock market continues its collapse today. The Federal Reserve did virtually nothing to alleviate the global slow down fears and the markets responded with massive downside. At this point, the Dow Jones Industrial Average has fallen over 600 points in the last two days. Today, the SPDR S&P 500 ETF (NYSE:SPY) is trading at $113.05, -3.58 (-3.07%).

Knowing the future is key to profits in the stock market. Whether the markets are surging higher or collapsing, there is money to be made. The sell off yesterday did not take a genius to call.

1. Factored Fed: The markets had been floating higher over the last two weeks on anticipation of major intervention by the Federal Reserve. While the markets were moving higher, things in Europe continued to get worse. This move higher was baking into the cake some major QE3 and manipulation by the Federal Reserve. Simply put, the bar was set far too high. Major intervention was factored in, anything less was going to cause a collapse.

2. Bear Flag: Technical analysis is the key to knowing the future. When looking at the daily chart on the S&P 500 or Dow Jones Industrial Average, a massive bear flag had formed. A bear flag is a bearish pattern which forms when a large drop occurs, then sideways to up action follows for a period of time. 

3. Key Trend Line Break:  Take the low from August  9th, 2011. Connect the lows on the chart since then and a perfect trend line appears. The markets closed below this trend line yesterday. This set in motion a break down that will take us to the August 9 lows and eventually lower.

4. Master Cycle Pivot: Tuesday, September 20th, 2011 was a major cycle pivot date to the downside.

The markets are in a tailspin after the FOMC policy statement yesterday. The key was to know the break down was coming and position yourself accordingly.

Gareth Soloway

1 Comments – Post Your Own

#1) On September 22, 2011 at 1:19 PM, traderbach (< 20) wrote:

Thanks Inthemoneystock!

I've been following your analyses & that in part I believe affected my return to 40% cash.  My own feelings, though not as technically erudite as yours, were obviously that there was nowhere to go but down.  As you say "it didn't take a genius to call", although I was continually amazed at how long the market zigged sideways in the face of nothing but bad news.  Hope to go shopping soon as a result but will wait at least until Aug 9th lows are reached.   Any advice as to where is the simplest & best source for your kind of technical analysis please?  I know some of the basics but you obviously know more and manage to use layman's language for the most part, always something I personally am grateful for.  Thanks for your posts!

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