With Pre-market futures trending at a loss of over 400 points, today and the rest of this week we face a significant test of resilience in the marktet. On one side, the last quarter boasted solid earnings mustered by slight productivity growth and a favorable tax plan; however, on the bearish side we are looking at unfavorable trade circumstances and a slight overvaluation of Earnings to cash flow ratio. For this idea I've included the 5 month old line of resistance, the long run trend lines, as well as two of the most recent short term trend lines.
To begin with, the long run trend lines stretch back all the way to 2007. As you can see, we recently tested the upward bound but more importantly there is plenty of room to fall whilst still remaining in the long run trend. With these technicals and the addition of the trade war catalyst there is enough encouragement for the market to pull to towards bearish trends.
What makes this week extremely significant is that the market is teasing with the resistance line that formed right around 23300. A breach and close below that point may be the mark of the start of a bear market. Most importantly, the opening is not the time to watch the market today, rather pay attention to the smart money at the end of the day. For those who don't know the smart/dumb money indicators; they are based on the volume and direction of open/near close trades. As a rule, retail investors place their orders overnight and buy at open, institutional investors place their trades during business hours and at a higher volume near the close. As we can see in the linked chart, smart money is selling this week.
www.wallstreetcourie...money-flow-index.htm
www.wallstreetcourie...gf-trading-index.htm
To begin with, the long run trend lines stretch back all the way to 2007. As you can see, we recently tested the upward bound but more importantly there is plenty of room to fall whilst still remaining in the long run trend. With these technicals and the addition of the trade war catalyst there is enough encouragement for the market to pull to towards bearish trends.
What makes this week extremely significant is that the market is teasing with the resistance line that formed right around 23300. A breach and close below that point may be the mark of the start of a bear market. Most importantly, the opening is not the time to watch the market today, rather pay attention to the smart money at the end of the day. For those who don't know the smart/dumb money indicators; they are based on the volume and direction of open/near close trades. As a rule, retail investors place their orders overnight and buy at open, institutional investors place their trades during business hours and at a higher volume near the close. As we can see in the linked chart, smart money is selling this week.
www.wallstreetcourie...money-flow-index.htm
www.wallstreetcourie...gf-trading-index.htm