Decision triangle: SPX500 could eventually break after all
For the past weeks, the earlier scenario of a crashing SPX did not play out as twitter expected, as I pointed out in one of my earlier analyses (see linked idea). Instead it upheld on the upside as I expected, which it would have continued if the sky would not darken again. But the overbearing event, which was missing on the index earlier and eventually failed the bears on twitter to see their shorts coming, could now appear after all.
Markets hold their breath as the U.S. economy continues to face three major problems:
The SPX is now carried by 51% of NASDAQ values mixing into the volume, and 48% financial values. Also these sections are hugely interdependent due the minor tech values are debtors of VC and with loans and bonds given by banks. They semselves face a raising amount of distrust in the system with more and more Americans withdrawing deposits, to which long-term bonds have been lend against. The current price for Gold rises in unbearable speed, as financial institutions build reserves for liquidity, because other sources for liquidity themselves continued to decrease over the past weeks. It would not be unreasonable to expect Gold to fall soon, either in a correction - as liquidity would be provided through other sources - or in a rapid dissolvement of the liquidity reserve, as required in a downfall of the markets.
The breakout in this triangle would decide in which directions the market head first, but we need to be aware of false breakouts due to high volatility. These movements would need to be interpreted as order stops on either side being squeezed out, if the volatility rises - this is a natural phenomenon on downward market phases as market participants expect to find the market bottom and trigger stop orders, which, if the overbearing downtrend maintains, get stop-squeezed right after that.
Watch this triangle closely.
Markets hold their breath as the U.S. economy continues to face three major problems:
- unsolved financial turmoil in the banking sector due to FED rate hikes, caused by devalued low-interest bonds issued in the past and a spike in the higher interest bonds issued this year
- a locked-in FED which can't neither raise the rate without bricking the financial and bond-dependant sector, nor lower the rate without bricking the economy by a returning inflation
- U.S. debt ceiling in a Congress progressingly unable to compromise, and China being the biggest creditor to the U.S.
- the U.S. dollar besieged; devalued by inflation and by the decision of certain BRICS states to decrease their dollar reserve in favor of CNY
- early signs of a recession in the U.S. which sets in late because everyone already expects it - and supports the market by counterpositions on their puts without the overbearing downwarding event
The SPX is now carried by 51% of NASDAQ values mixing into the volume, and 48% financial values. Also these sections are hugely interdependent due the minor tech values are debtors of VC and with loans and bonds given by banks. They semselves face a raising amount of distrust in the system with more and more Americans withdrawing deposits, to which long-term bonds have been lend against. The current price for Gold rises in unbearable speed, as financial institutions build reserves for liquidity, because other sources for liquidity themselves continued to decrease over the past weeks. It would not be unreasonable to expect Gold to fall soon, either in a correction - as liquidity would be provided through other sources - or in a rapid dissolvement of the liquidity reserve, as required in a downfall of the markets.
The breakout in this triangle would decide in which directions the market head first, but we need to be aware of false breakouts due to high volatility. These movements would need to be interpreted as order stops on either side being squeezed out, if the volatility rises - this is a natural phenomenon on downward market phases as market participants expect to find the market bottom and trigger stop orders, which, if the overbearing downtrend maintains, get stop-squeezed right after that.
Watch this triangle closely.
Trade active:
We did now break out the decision triangle, but not with as much enthusiasm as we would expect in a hausse. My Stop-Loss would be 4202; a week's high which has been confimed as a resistance. Market pessimism would suggest that a main driver of the price are the put positions to which the brokers open counter positions. Asset Management surveys are cited with a broad pessimism for the stock market which just isn't reflected in the price yet.
Order cancelled:
The trade was stopped at 4195, but I forgot to blog it. I am now on a long side for SPX, as you can see in my newest idea.
