How Far Will The Market Fall?

[IFocus]

Last hour of trading for the week.....Market down today
Late rally this afternoon????
Hope so as I would like to sell something!

Not unusual for traders not to want to hold positions over weekends in such volatile times.

 

[tonyparis]

Not unusual for traders not to want to hold positions over weekends in such volatile times.

So I should have sold yesterday???
My plan was to just buy and forget about for the next 6 months but I am checking the market every hour! Maybe my term deposit wasnt so bad after all. Definitely less stressful

 

[gartley]

Just saying your charts and analysis are much appreciated and informative.

Thanks Smurf, likewise with all the content you post, been following for many years here))
Good bunch of people on this forum, and a good outlet from the depressing news day to day news we are bombarded with every day!

 

[Logique]

Just saying your charts and analysis are much appreciated and informative.

Gartley, my thanks also. There's a good core of posters in ASF who always contribute something productive. ASF as a resource is light years ahead of the likes of 'Hot Cropper'

 

[gartley]

Just some add ons to post #377. A chart with EW annotations is all good and fine but how does one trade it? EW is a theory and model and a good guide sometimes but it doesn't mean the market is playing ball with that model. We can only trade the market that is in front of us, and a market has to tell us what it wants to do first and if we are lucky enough we can catch a sustained trend. These are the cycles routines I use for day to day trading using the folllowing multi timeframe analysis with 1h, 3h, daily and Weekly charts.
This morning the 1h Trend Indicator crossed below 100 after being in a sustained trend all week in the 1h timeframe. As I type it's at -100 suggesting a the 1h trend will be sustained for now. The 3h TI crossed below 100 suggesting a 3h down trend but this should be a countertrend affair as daily TI is still in uptrend cycle until otherwise suggested. The attached weekly chart shows TI is below -100 and as such a sustained downtrend until proven otherwise

 

[MrChow]

Stocks are yet to establish a gradient so even hypothesising a worst case scenario, the biggest losses need an elongated timeline. EG. In 1929 the trend line was about -30% p.a.

So it is unlikely for a market that fell -35% in a month not to rebound to establish a more sustainable rate of decline if this is going to go big (counter intuitive).

2008 had the same +20% rally after the first leg down.

 

[moXJO]

I bought a bunch of bbus with an itchy finger to short something.

Come on Trump, time to say something stupid. It's a high percentage play imo.

 

[Dona Ferentes]

any rally attempts snuffed out. and a >40 pt drop at close-out.
(two days of weekend market 'lockdown' coming, when a lot can happen/ change.)

 

[InsvestoBoy]

any rally attempts snuffed out. and a >40 pt drop at close-out.
(two days of weekend market 'lockdown' coming, when a lot can happen/ change.)

View attachment 101743

Not the first time this week that sellers all day then once close is in, big bids:


Todays post market fun including +100 point move in <1 minute.

 

[Dona Ferentes]

Not the first time this week that sellers all day then once close is in, big bids:
Todays post market fun including +100 point move in <1 minute.

interesting. thx

 

[MrChow]

Anatomy of a Market Crash during the first 6 months -

1929: Largest Drop -45% Largest Rally +35%
1987: Largest Drop -35% Largest Rally +20%
2008: Largest Drop -20% Largest Rally +10%
----
2020: Largest Drop -35% Largest Rally +20%

Based on history this week's market rally was not really out of the ordinary. No better time than after a $2T Stimulus and Policy U-Turn to protect the economy.

But these short term recoveries have occured within bear markets that have still lost between -35% and -85% so it is more a functional mechanism than an indicator of where we will end up.

 

[InsvestoBoy]

History of the S&P500: What happened in the first 6 months of market crashes:

1929: Largest Drop -45% Largest Rally +35%
1987: Largest Drop -35% Largest Rally +20%
2008: Largest Drop -20% Largest Rally +10%

If you were forecasting this current period and went with:

2020: Largest Drop -35% Largest Rally +20%

It would fit in with previous patterns.

So you're forecasting the retracement is over?

 

[MrChow]

S&P500 isn't even priced for a bear market at the moment (technically -19%).

So I think short-term movements: pushing -40% was oversold, getting back within -20% is now overbought, are overshooting both ways and we should see a reversal for some balance.

On a longer time scale I am high conviction that they can get back to 3000 before the end of September. I think a secondary wave from October on is the real danger.

 

[Country Lad]

Not the first time this week that sellers all day then once close is in, big bids..............Todays post market fun including +100 point move in <1 minute.

Not too sure I follow your chart as there is no time scale. From Iress:


and these are the 30 second and closing numbers

 

[InsvestoBoy]

Not too sure I follow your chart as there is no time scale. From Iress:
View attachment 101754

and these are the 30 second and closing numbers

View attachment 101755

It's 1 min bar chart of XJO CFD that tracks SPI futures showing before and after the close.

Same chart below with Sydney timezone timescale at the bottom, 3 vertical bars show 4PM close, 4:10PM Closing Single Price Auction start and 4:12PM Closing Single Price Auction end

 

[fiftyeight]

So you're forecasting the retracement is over?

View attachment 101750

I will play the game, yup retracement is over.

Not sure what will be deeper, the next leg down the hole I usually dig for myself...hence the avatar

 

[IFocus]

Still very early IMHO with a number of acts to come.

Another indicator is too many here are waiting to buy and maybe thinking we will bounce out the other side somewhere.

I am thinking it will take years to recover from these restrictions of movement that's killing employment and lots of changes psychologically for large masses of people.

WA to go to lock down of regional areas next week.

Something Morrison said today which was said to him by the chief medical officer which made sense whatever changes they make will be permanent for a minimum of 6 months (really 12 to 18 months).

That will apply to every country world wide.

(maybe not Texas)

 

[MrChow]

Double checked the S&P500 and they're down -22% overnight.

Oil took them down -20% in 2016 (and is at a lower price today).

Does that mean they only attribute -2% to Coronavirus?

Seems like they've dramatically overshot the upside so I'd anticipate a -10% retrace will be fairly swift.

The market may actually value them at -30% from peak on a fundamental basis but to make money they need volitility swinging over and under and back to that marker.

If that all happens probably see the XAO back in the 4500s.

 

[Smurf1976]

Putting this forward as a serious thought and not wanting to turn this into a political thread but I pose a question.

Are the comments from Donald Trump about the US going back to work really just aimed at the stock market and nothing else?

That is, I'm suggesting that there's no real thought on his part that what he's saying is actually going to happen, he's just been told to say it in order to help ignite a bounce in the market and avert a straight down crash. A bounce which will end once it becomes undeniable that the plan won't be implemented.

I don't intend that as political comment but as trading comment. My basic thinking being that the idea is at least possible, it has indeed brought about a bounce, and from a timing perspective the idea that we get a second up move ending just before Trump's back to work date (as per gartley's charts #377 in this thread) does seem plausible.

Thoughts?

As I said, my point is a trading one not a political one.

 

[IFocus]

Double checked the S&P500 and they're down -22% overnight.

Oil took them down -20% in 2016 (and is at a lower price today).

Does that mean they only attribute -2% to Coronavirus?

Seems like they've dramatically overshot the upside so I'd anticipate a -10% retrace will be fairly swift.

The market may actually value them at -30% from peak on a fundamental basis but to make money they need volitility swinging over and under and back to that marker.

If that all happens probably see the XAO back in the 4500s.

Add a few % for trends pretty much always over shooting up or down.