Initial Stages of Global Stock Market Crash In Progress?

Initial Stages of Global Stock Market Crash In Progress?
http://www.thebullbear.com/profiles/blogs/initial-stages-of-global-stock

Last week SPX appeared to complete an abc sideways correction.  By Friday the index was heading back towards its lows and ended the day and the week just above critical support at the confluence of the 200 EMA and the uptrend from March 2009.  The setup is for a potential gap below this support zone on Monday, which could then trigger sell stops leading to a cascading decline.

Commodities continued to lead to the downside, with Crude breaking lower and the Agriculture and Grains sectors breaking key long term support levels.  Gold and Silver also broke down from key support.

At the same time, US Dollar Index closed the week above long term downtrend resistance and above the key 76.00 level.  VIX hovered just below long term downtrend resistance and has yet to register significant levels of fear in the market.

Technical indicators moved back from oversold and excessively bearish short and intermediate term readings while long term readings continued to deteriorate.

Overall the setup continues to be for a major break of support and a dramatic acceleration of the downtrend.  Whether this entails a strong C wave decline to support, similar to the March 2011 decline, or an outright crash, remains to be seen.  Either are distinct possibilities.

Late in the week, governmental and monetary authorities made transparently desperate attempts to prevent the breakdown of asset market prices.  First, the announcement of a Greece austerity plan was timed to the minute to prevent a break of the 200 EMA and fostered a short covering rally.  Next, Obama attempted to stimulate the markets by releasing strategic petroleum reserves to drive down the price of crude oil which would presumably give the economy an across the board "tax cut".  Neither of these efforts were successful as corporate and sovereign debt related news triggered additional selling.  In fact the net effect of last week's volatile correction and the efforts at keeping the markets above support was probably to exacerbate the situation by expending scarce buying pressure from "buy the dip" traders and investors and short covering in a minor corrective range.

The fundamental news cycle has now shifted into earnings warnings prior to the official onset of earnings season on July 11.  Negative corporate news out of Micron (MU) and others hit technology hard and grumblings are heard that companies will be pre-announcing earnings disappointments going forward.

Although European authorities and the IMF would have investors believe that the Greece crisis has been contained, evidence is mounting that Italy is next on the hit list.  The downgrade of the Italian banking sector is likely the first salvo in an ongoing attack on Italy's financial stability.  No doubt other countries are set to show cracks in the facade of their solvency soon as well.

In the following video I detail the current basic technical picture for global markets.  Before viewing it you might like to also review my prior videos and blog postings in this series:

Stock Market Crash Possible Soon?

Global Markets Teeter Precariously on the Edge

Here's a direct link to the current video:

http://youtu.be/zP9V6LMUSS8

 

As I have been saying for weeks now, the basic technical situation is quite precarious and even a cursory look at the charts of the major markets is enough to alert the open minded investor that there is major risk at hand.  Yet even so, most analysts are focused on a perceived short to intermediate term "oversold" condition or an apparent "excessively bearish" sentiment picture.  

The major breakout on the US Dollar Index chart is perhaps the most important indication of that a rapid, dramatic shift from risk to safety is under way.

 

VIX would be the next big indicator to make a dramatic breakout.  It appears to be ready to move.

At the time of publication SPX futures are down .45% in very early Asian trade and have broken the 200 EMA.  Dollar is rallying and commodity futures are down across the board.  

Naturally, the market can prove us wrong at any time, and we should not get complacent or take our eyes off the ball.  Any move above 1293 on the futures would be enough to get me to close my short positions and reassess the situation.

To read the full BullBear Market Report and receive daily updates to this analysis, please join us in the BullBear Traders room at TheBullBear.com.

---

 

Need some help staying on the right side of the markets?  Join the BullBear Traders room at TheBullBear.com.  You'll get this kind of timely, incisive, unbiased stock and financial market trading, timing, forecasting and investment technical analysis and commentary daily.  It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month.

 

Keeping You on the Right Side of the Market

 

JUST POSTED: 06/26/11 BullBear Market Report - BullBear Trading: Stock and Financial Market Technical Analysis http://bit.ly/md6MvD

Stock Market Crash of 2011 Could Be Imminent (Financial Crisis, Depression, Economic Collapse)

Stock Market Crash of 2011 Could Be Imminent (Financial Crisis, Depression, Economic Collapse)

YouTube - Stock Market Crash of 2011 May Be Imminent http://bit.ly/jwjHE5

YouTube - Stock Market Crash of 2011 May Be Imminent http://bit.ly/jwjHE5

Global Markets Teeter Precariously on the Edge

Here’s the latest from Steven Vincent of TheBullBear.com.

Source link: http://www.thebullbear.com/profiles/blogs/global-markets-teeter


Global Markets Teeter Precariously on the Edge

I recommend that you read the prior blog entry before assimilating the information in this new report.

So far the core analysis presented in the last report has been validated by market action, technicals and ongoing developments in the fundamentals.  

As suggested, markets around the world have tested or violated key technical levels.  In this video, I follow up the prior video report with further evidence of an ongoing, global technical breakdown across virtually all world markets.

Here's a direct link to the video: http://www.youtube.com/watch?v=lnGFTFVv-Lg

Tonight, India has plunged 3.3% upon breaking the support line indicated in the video.

Nasdaq 100 has closed below its 200 EMA for three consecutive days and is challenging its long term uptrend:

It appears that Crude Oil and quite probably the commodities complex in general is leading the next break lower in a repeat of the May top.  The geosynchronous technical weakness is not likely to be an anomaly or a false signal and is already in a sufficiently advanced stage of development that a reversal and re-initiation of the bull market are unlikely.  

 

READ THE FULL BULLBEAR MARKET REPORT: 

http://www.thebullbear.com/group/bullbeartradingservice/forum/topic...

 

---

 

Need some help staying on the right side of the markets?  Join the BullBear Traders room at TheBullBear.com.  You'll get this kind of timely, incisive, unbiased stock and financial market trading, timing, forecasting and investment technical analysis and commentary daily.  It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month.

 

Keeping You on the Right Side of the Markets

 

Stock Market Crash Possible Soon? http://www.thebullbear.com/profiles/blogs/stock-market-crash-possible

Is A Stock Market Crash Possible Soon?

http://www.thebullbear.com/profiles/blogs/stock-market-crash-possible

Is A
Stock Market Crash Possible Soon?

There are significant signals in the current market that a crash
or meltdown scenario could unfold sometime in the next 1-2 weeks.
Crashes are rare events and nearly impossible to predict, but many
elements that could combine to produce a financial market calamity
appear to be present at this time.

This video
reviews the current technical condition of the major world stock
markets. In it I examine each index in terms of the relationship
between price and the uptrends from March 2009 and
August/September 2010, the April 2010 top and March 2011 low, the
20, 50 and 200 Exponential Moving Averages and areas of
significant horizontal support/resistance.

Here's a direct link to the video: href="http://www.youtube.com/watch?v=OGVv2ODBQ-E">http://www.youtube.com/watch?v=OGVv2ODBQ-E

Every major stock market in the world is either hovering just
above or directly upon or has already broken a critical area of
technical support. Ordinarily this might represent a major buying
opportunity. But the current market setup may be anything but
ordinary.  In fact it may be quite extraordinary.

By moving dramatically ahead of the markets and leading price
lower, the market's underlying technicals tend to indicate that a
sharp break to the downside is imminent. Many indicators have led
the market lower and now price will likely play catch up to the
underlying technical condition of the market. Here is just one of
many examples:

href="http://api.ning.com:80/files/1xQfgskAKKy1q7QQpzvsAryINiqK*mLOi6V0EF*I4TzeMiTCLa6SuA6WeLWHHtYvevIC5mIk*4DQTXbfut2kBjF8Enn5SVfh/Screenshot20110612at4.58.53PM.jpg"
target="_self">src="http://api.ning.com/files/1xQfgskAKKy1q7QQpzvsAryINiqK*mLOi6V0EF*I4TzeMiTCLa6SuA6WeLWHHtYvevIC5mIk*4DQTXbfut2kBjF8Enn5SVfh/Screenshot20110612at4.58.53PM.jpg?width=721"
class="align-full" style="border: 0px solid; padding: 10px;
width: 500px; height: 415px;">

In spite of a very modest 7.5% decline over 6 weeks of trading
(1.25% per week), Percent of Stocks Above the 20, 50 and 200 EMA
have declined to precipitous lows usually associated with huge
selloffs. This is a prime example of the technicals leading the
market lower.

Here's a closer view of NYSE Percent of Stocks Above the 200 EMA:

href="http://api.ning.com:80/files/HXT6DGp5WSIg5UWOmtzOdLEKaVdPT8JJ09dmxKxeOsk3*OlNTj6KPpZR6adtAAEIuIeEyaASj-iPY0oxxMrQBsCi1lsxrW1A/NYA200R.png">alt="stocks above 200 ema" class="align-full"
src="http://api.ning.com/files/HXT6DGp5WSIg5UWOmtzOdLEKaVdPT8JJ09dmxKxeOsk3*OlNTj6KPpZR6adtAAEIuIeEyaASj-iPY0oxxMrQBsCi1lsxrW1A/NYA200R.png?width=750"
style="border: 0px solid; width: 500px; height: 281px;">

Only 55% of NYSE stocks are trading above their 200 EMA after a
minor 7.5% correction. Even though market price has yet to take
out the March low, the indicator has plummeted below its March low
and is not far from its August 2010 low. It's moving averages have
crossed into bear market mode. So on a long term basis nearly half
of the stocks traded on the NYSE are trapped under long term
resistance in a market that is showing historically weak buying
pressure and significant and rising selling pressure.

Many analysts are calling this a signal of an oversold market. I
think they are wrong. An oversold condition requires some
capitulation selling and some fear and we have not seen that.
Remember, crashes and capitulations generally come from oversold
conditions. An oversold condition is also only a buy signal under
bull market conditions and there are many reasons to believe that
we are no longer in a bull phase.

There is very little fear in this market. VIX has barely budged:

href="http://api.ning.com:80/files/jXAMZVLJgBheA9ioRikgaG*MLurKlQFlmNYDrAJ*ZEWNt*YLHOC5sy4cixVU2ixTf3kSRZ4zmeJzctWlxgUFgNszHbUJ8V*u/VIX.png"
target="_self">src="http://api.ning.com/files/jXAMZVLJgBheA9ioRikgaG*MLurKlQFlmNYDrAJ*ZEWNt*YLHOC5sy4cixVU2ixTf3kSRZ4zmeJzctWlxgUFgNszHbUJ8V*u/VIX.png?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 281px;">

Near market bottoms when fear is strong, traders switch to the
use of ETFs instead of individual equities in order to insure that
there will be adequate liquidity to exit the market in a hurry if
things should turn ugly. This is represented in the SPY Liquidity
Premium indicator:

href="http://api.ning.com:80/files/GzR6lP3OXzxWuBpwvhIa9IU4ZaD8ujB4FG6wl299-ig1eco7dVpvzNSHjMBhTvjNLFIV0VOET5q409qaHiF4cLYlm5lWAt4x/spyliq.jpg"
target="_self">src="http://api.ning.com/files/GzR6lP3OXzxWuBpwvhIa9IU4ZaD8ujB4FG6wl299-ig1eco7dVpvzNSHjMBhTvjNLFIV0VOET5q409qaHiF4cLYlm5lWAt4x/spyliq.jpg?width=742"
class="align-full" style="border: 0px solid; padding: 10px;
width: 500px; height: 350px;">

In spite of everything we have discussed above, where is this
indicator in relationship to its March low or April 2010 low? Not
even close to showing the fear usually associated with a bottom.

This technical evidence tells me that the selling HAS NOT EVEN
STARTED YET. And it is likely to get started soon. There is MUCH
more technical evidence that supports what I am saying here which
has been published in a full report for href="http://www.thebullbear.com/group/bullbeartradingservice"
target="_blank">BullBear Traders members.

When you have a situation where price needs to play catch up to
the underlying technicals and market participants are not fearful
and are still buying the dip, you have the recipe for a selling
panic of some kind.

Today's weak bounce is probably just another selling opportunity.
Early action in Asia, US futures and the Dollar suggest that the
correction may be over already:

href="http://api.ning.com:80/files/f4XyFMEhH3kU-Psez-dh*MgFzfojZOpZ27InwCIVV39FjIu2z2nh-tao2-MCS7m8h9pO2O2H8plgEy6IXdZ17g2-UtpnvWQ5/es2.gif"
target="_self">src="http://api.ning.com/files/9OviI6CoFB7aQY8zev-yyXnECc1ybnyfV3zSYA32D7c79K*CqKJwN1csNUdIBlJChagZKFW0wW2-Wp0gSnM4b14HxXQn0hqC/es3.gif?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 262px;">

This is wave C as I see it at this time. 2 of C was a large abc
flat and (ii) of 3 of C may have been a smaller version with c
falling short of a, making it a bearish running flat.

Volume on today's rally was POOR.

href="http://api.ning.com:80/files/2ECLp1M1rr-KcwVxPwpkzKJ9uK06wEVfx2S03SXv0JzUJ6-YM5RogzKafiKPJoFZscaduBjelHiSWoDXT*tEFQFCFzH7U-L9/spx3.png"
target="_self">src="http://api.ning.com/files/2ECLp1M1rr-KcwVxPwpkzKJ9uK06wEVfx2S03SXv0JzUJ6-YM5RogzKafiKPJoFZscaduBjelHiSWoDXT*tEFQFCFzH7U-L9/spx3.png?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 281px;">

Volume was lower than the 50 MA of volume and lower than any of
the down days in the month of June.

Summation Index actually FELL today:

href="http://api.ning.com:80/files/u3PNU1edhjrTR9MzI6xEbaGEEbtBxc7V3q6NqaRjVha5SJhtZmjdZ6q-mOSY*Cwrn6ve-WkNe*YAXZ58YDrUKq4ugbvN-kD9/si.png"
target="_self">src="http://api.ning.com/files/u3PNU1edhjrTR9MzI6xEbaGEEbtBxc7V3q6NqaRjVha5SJhtZmjdZ6q-mOSY*Cwrn6ve-WkNe*YAXZ58YDrUKq4ugbvN-kD9/si.png?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 281px;">

McClellan Oscillator gave a negative reading (though higher than
the prior day) and the 50 EMA did not budge at all:

href="http://api.ning.com:80/files/ogvhx-bR2wvk*D2Cz7ZN8fFY6hIsDbfHr2E7oK3ytU9VLGJUUjpRNXoCrZbGmZYATxkWY-TUYTMLOGdLgo0D59IkpUK6BlBS/mo.png"
target="_self">src="http://api.ning.com/files/ogvhx-bR2wvk*D2Cz7ZN8fFY6hIsDbfHr2E7oK3ytU9VLGJUUjpRNXoCrZbGmZYATxkWY-TUYTMLOGdLgo0D59IkpUK6BlBS/mo.png?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 281px;">

Breadth Thrust Indicator FELL today, a particularly ominous sign,
since if this were a real bottom of any kind there would be a
breadth thrust signal of some kind:

href="http://api.ning.com:80/files/dQUZfO5-EhmaEUg5JG0sQwLqvOcPfMWDVF5U*tOqOUdhkCijuIEDIo0DnRCFmIil1wqW*LRAvo-SlsPICB7cSh1GKupXAsK3/bti.png"
target="_self">src="http://api.ning.com/files/dQUZfO5-EhmaEUg5JG0sQwLqvOcPfMWDVF5U*tOqOUdhkCijuIEDIo0DnRCFmIil1wqW*LRAvo-SlsPICB7cSh1GKupXAsK3/bti.png?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 281px;">

Many other indicators, such as Bullish Percent Index, did not
even register a blip. From what I can see the technical quality of
today's rally was very poor.

Also, Dollar rallied into the close and Euro and Aussie gave up
almost all their gains. This has continued in the Asian session
and Dollar is once again near 75.00. Looks like iii of C down may
have begun in Euro. I am short more EuroDollar.

href="http://api.ning.com:80/files/amHlE62B*kK3HmPw-bsfHwIcNtBnZIqjHMgMsVTy8gJxxaIatRrNcCWQpigLoLEimEVQyMF6ZNPyWsD0tQi8nvvyrMW6riUK/euro3.gif"
target="_self">src="http://api.ning.com/files/amHlE62B*kK3HmPw-bsfHwIcNtBnZIqjHMgMsVTy8gJxxaIatRrNcCWQpigLoLEimEVQyMF6ZNPyWsD0tQi8nvvyrMW6riUK/euro3.gif?width=721"
class="align-full" style="border: 0px solid; width: 500px;
height: 262px;">

To read the full BullBear Market Report, please join us at href="http://www.thebullbear.com/group/bullbeartradingservice"
target="_blank">BullBear Traders room at href="http://www.thebullbear.com/" target="_blank">TheBullBear.com.

---

Need some help staying on the right
side of the markets? Join the href="http://www.thebullbear.com/group/bullbeartradingservice">BullBear


Traders room at href="http://www.thebullbear.com/">TheBullBear.com. You'll
get this kind of timely, incisive, unbiased href="http://www.thebullbear.com/" target="_blank">stock and
financial market trading, timing, forecasting and href="http://www.thebullbear.com/" target="_blank">investment
technical analysis and commentary daily. It's free to join,
no credit card is required and if you like my work you just make a
donation at the end of each month.

href="http://api.ning.com:80/files/YXPKNxMJR7*N5xk*senvLh*SzETNU5HX49l0PiONj-NIivJ5Y1B0sv*43rSyI7Fp-NW*t*JqXlRY8pKzNZMX42W5Zxb7rOc1/BBTBanner2.png?width=925&height=142&xn_auth=no&type=png">class="align-center"
src="http://api.ning.com:80/files/wzfIS2rbSZIL--NTeLTnWlkeucujF4SGHAdEazVY5l3fv04wlbHrO3aQwgsEmLVgiJIA-RjXXuvw8f6rgKnZreQqD7wpU1r-/BBBannersm.png?width=468"
width="468">

Keeping You on the Right Side of the
Market

Potential Long Term Topping Process Underway http://www.thebullbear.com/profiles/blogs/potential-long-term-topping

Potential Long Term Topping Process Underway

(The following is an updated excerpt from the latest BullBear Market Report for BullBear Traders members):

 

In the introduction to this report, I detailed many of the non-technical elements that should have happened and could have happened and almost happened--but that ultimately failed to happen--leading to a non-confirmation of an ongoing bull market.  Let's reiterate: I gave the bull the benefit of the doubt and argued its cause to the extent that it gave a cause to argue.  But when reality departs from argument I will have to go with reality.  Let's look at some technical factors which failed to confirm an ongoing bull market and give substantial cause to anticipate a renewed bearish environment.

First let's examine a long term chart of SPX:

Since the August/September 2010 bottom, we have been operating under the thesis that SPX was probably in a bullish Wave 3 advance.  If this is the case, there are some technical characteristics which should be present and some which should not be present.  Separately, the persistently declining volume over the course of entire run and the successive RSI divergences are not necessarily troublesome, but together they add up to a technical non-confirmation and make the move much more likely to be a C wave.  If the 50 MA of volume starts to turn up and volume levels persist above the 50 MA during an ongoing decline, that will probably be a long term bear signal.  If RSI declines below 30 and breaks its March 2009 low, that would also be another confirmation of a bearish shift.

The 50 EMA of Advances-Declines is testing its key support zone from which intermediate term rallies have been initiated many times since March 2009:

Of course, it's possible that it may rally sharply off this support zone again and the market may reverse.  But there are some signs that that is not what is going to happen this time.  First, note that the indicator has made lower highs as the market made higher highs--a bearish divergence.  Second, note that the indicator recently bounced off of support but failed to attain a new high before heading back down again.  Also note that the indicator is now nearly at its support level after a minor sell off in the market.  This means that if the market breaks support this week the indicator is likely to also break through support and head back down to its May or July 2010 lows or below.  This would likely represent a bearish range shift for this indicator and the markets.

Percent of Stocks Above 200 EMA has broken down badly:

This is just one example of the many indicators that are leading the markets lower.  The indicator has declined to readings well below the March and November lows while market price has not yet even taken out the March lows.  Generally when technicals lead a market lower it is a good signal that market price will follow soon.

While the situation described thusfar could certainly reverse and propel markets higher, the important point to be grasped here is that on every count there have been significant attempts to move in a direction that would be bullish for stocks and general asset prices that have FAILED badly and REVERSED strongly in the opposite direction.  What makes this even more inauspicious is the total failure of the trading and investing community to come to recognize and come to terms with the situation.  Trapped in attachment to to established views they may be forced to reckon with reality all of a sudden, producing a steep, sudden decline in prices as everyone heads for the exit at the same time.

In the short term a minor rally is possible as there may be a bit of short term selling exhaustion and a bit too much bearishness creeping in to the markets.  if there is a rally, the next minor high should be a good shorting opportunity for the next wave down, which will likely be the strongest move down seen yet this year.

 

To read the full BullBear Market Report, please join us at BullBear Traders room at TheBullBear.com.

---

 

Need some help staying on the right side of the markets?  Join the BullBear Traders room at TheBullBear.com.  You'll get this kind of timely, incisive, unbiased stock and financial market trading, timing, forecasting and investment technical analysis and commentary daily.  It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month.

 

Keeping You on the Right Side of the Markets