The Coming Stock Market Decline May be a Monster
Stock-Markets / Stock Markets 2016 Feb 02, 2016 - 02:50 PM GMT
Good Morning!
The SPX Premarket appears to be challenging yesterday’s low at 1920.30.
ZeroHedge reports, “It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.”
Here is a look at the January “Bear-ometer” to get a statistical indication of what may follow. The singular breakdown during the normally “positive season” tells us that this may be a year for the records. The next two weeks may tell us even more. By the way, yesterday I mentioned the “target date” for the next decline to be Thursday, January 11. I was wrong. The correct target date for this decline, should it span 8.6 days, would be Friday January 12. It may be sooner, but usually these declines will match the length of time it took in the rally just prior…exactly 8.6 days. Finally, the Cycles Model offers us a triple Primary Cycle low between February 10 and February 12. This suggests the decline may be unusually strong, and may develop into a waterfall event.
TNX has fully committed to the decline by crossing beneath its Cycle Bottom support at 19.09. The speed and depth of this decline is a sign of a developing panic among equities owners.
The EuroStoxx Index has fallen this morning to 2968.64 thus far. This is only 16 points away from its Cycle Bottom support which has already been broken. The likelihood that Stoxx may decline to its Head & Shoulders neckline is high. Although the EuroStoxx Cycles are not the same as those of the SPX, it does have an expected low to make either by February 12, or shortly thereafter.
USD futures have declined to 98.84 this morning, only 10 ticks away from the trendline and Intermediate-term support at 98.74. A break of those supports may launch a waterfall effect on equities and commodities, since those trades are so dependent on the Yen carry trade, which is based on the assumption that the Yen declines and the Dollar rises.
Crude oil declined to a fresh morning low of 30.07, reinforcing the observation that the decline may be underway again. Crude has a quadruple Primary Cycle low due between February 10 and February 12. That suggests the decline may be a monster.
Regards,
Tony
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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.
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