The famous Golden Ratio of 161.8% or the 1.6180339 phy alerted 2 weeks ago of a major cyle high on the verge. And it did come.
The important bull market top called for on the 16th, ...:
„Now the S&P 500 bull is at the Golden Ration - again!"
... is now finally sealed after historical biggest and at same time fastest crash waves ever recognized.
Markets flushed huge down days entire week after catalyst has arrived in the form of the coronavirus, which first brought the Chinese economy down on the knees, thus disrupting global supply chains and now threatens to slow down consumer demand to a standstill everywhere. And that possibly for many months.
=> IF we see other countries shutting down like China, this will be a longterm problem for the stock markets.
As things stand now, the next candidates for such a long lasting horror scenario are France, Germany, Italy and South Korea where the number of infected people are rising sharply.
Although the fundamental background is now so grim with the panic level at never seen extremes cause the economic fallout is set to be severe as the rapid spread of the virus is likely unstoppable now as it has established itself in Europe and is about to emerge in the USA there is some hope for the stock market bulls and even a small chance that the very worst of the drawdown is in and this bear panic cycle is close to it`s end.
1 against all - or the now most important support magnet on earth
What if the best performing index of the stock bull market now only wants to test back its main support magnet? To confirm the master support level in the new year that was predefined as important in 2019?
That the entire global stock panic has only one purpose, namely that the Leading Index of the 11-year bull market has to confirm it`s currently most important support magnet of 2020?
Of course I`m talking about the NASDAQ-100 index resp. the NQ # what is the symbol for the NASDAQ-100 emini continuous futures contract:
From a chart technical point of view, the Friday panic lows exactly are set at the 2019 Rally Support line highlighted small-green above. In the new year, this is the first test of what is for sure the most important support in the equity universe at the moment. In the gone year 2019 this relative steep support (= rally) was defended once very precisely at October 2019 low and probably radiated important support energy at 2, 3 other occasions.
The monthly chart is now clearly in a quandary. On the one hand, the most important and strongest support so far has held up successfully and again at the test. But the February close also means a potentially very sustainable sell-signal, as the gains of the last few weeks have been erased, an official monthly reversal candle was triggered and the year 2020 is now showing a minus.
However, what IF NQ # natural given rally support would only be tested back "perfectly normally and ordinary" in the current bull market for the third or fourth time before the bull market wants to continue?
What if the Algos and Big Whales are just waiting to jump back massively into AAPL, AMZN, FB, GOOGL, NFLX, NVDA, MSFT etc. after the probably necessary backtest of the 2019 Rally Support? It only takes to turn these few but powerful stocks to end the panic cycle and trigger a perhaps more powerful - global!!! - next bull market rally cycle or at least a sustainable Dead Cat Bounce cycle!
NQ # at Friday 8126.25 pts hit master support level for sure. In the weekly chart above the NQ # forms a support nest of all in all 4 supports at panic low surroudings that was successfully tested and defended on a daily and weekly and monthly closing base.
We should be now be on alert picking some longs and prepare for a stronger Dead Cat Bounce (DCB) cause especially the 50 Week EMA again has held nicely – as it did at the past 4 backtests of the 2019 rally year - and released some bull forces not only into the week but also into the very important monthly closing auction.
I think we have to prepare for 2 way trading next 5 to 10 days cause the momentum could have shifted from bear to bull and if current panic lows are successfully tested back on Monday into Tuesday and as long the 8050 pts holds on daily closing base into Tuesday close we have to recon with a significant technical bounce into major 9000-9200 pts DCB reaction target, although the fundamental background is now so grim.
Hmm, think a first daily close above Friday high, what is at 8574 pts, should be a sufficiently safe indication that the DCB has started!
Daily is just nearterm bullish now cause also 200 Day MA has held AGAIN at panic cycle lows and released the very first stronger bounce of the entire sell-off. Slow Stokes dead on schedule made buy cross at important month close. On the last two occasions where we had this combination it went up for many days and for a long time.
Technical analysis performed above offers that at same time and at same price daily & weekly & monthly chart have defended main bull market supports – this is nearterm bullish cause time has met price – and therefore NQ # might reach a 9000-9200 pts Dead Cat Bounce (DCB) magnet rapidly!
So, what do you think!!??
To get an idea of how far and fast this market could drop further in course of March/April if a daily and/or weekly close below 8050 pts is triggered we have to hop back to the weekly chart work.
Then, IMHO, the next test of 175 Week EMA and the round 7000 pts Gann down magnet number seems almost mandatory during a longer-lasting 2020 crash wave, as the 175 Week EMA is next lower important yearly support rail ==> 175 Week EMA support triggered the famous 2018 Xmas Low!
IF a DCB is able to test back 9000-9200 within next 5 to 10 trading days this seems ideal sell-short entry for more 2020 crash wave to come because after all and in spite of the momentum turn that has now probably taken place, the monthly chart has delivered a stronger sell signal!
I would definitely use the 9000-9200 DCB resistance area to exit some remaining stock long positions that look weak and have underperformed since alltime-highs, because what is threatening can turn out to be very bad for the bulls.
Within: „Now the S&P 500 bull is at the Golden Ration - again!"
I`ve pointed to a due severe correction in the US stock markets. Time (due 1-year-cycle highs) and price together have been ripe for correction cause price too high and back at natural phi resistance out of 666 pts evil S&P 500 year 2009 last bear market low.
I've been browsing through my archives
for the last few days to find out why it's so brutal right now and I
found this very important and probably also substantial turning point
in the YM # (Dow Jones emini continuous contract).
Afterwards is always stupid, sure. But I simply lost sight of it, also because this important higher bull market low from the year 2015 only occurred in this YM #. No other important US index reached its annual low in August 2015.
35 Candle up starting at # 1 // 2015 Low. When we drag Blue Arc into high of bull month # 35, what is 35 - 1 = natural important 34 Fib number the 29543 pts alltime-high is printed at former activated lower line of 1st double arc uptraget (resistance) and that is at the 55th candle of the above depicted bull market cycle. And bang, there it is. Time has met price and down she went.
Turns caused by a 55 Fib number in the higher time frames can be hefty according time and price simply because the 55 is such an important possible turn time magnet. That seems to be the case now ...
YM # and Dow Jones and S&P 500 sell-off is way worse as the damage in the NASDAQ-100. YM # for the month closed back far below important 26925-26960 first square line what represented usually very strong initial horizontal support on yearly base.
What was support, becomes resistance when severely broken to the downside and I think IF YM #, Dow Jones, S&P 500 with the kind support of the NQ # were also able to bounce for several days, this first square line could be tested back. Watch closely how important this horizontal was at important 2018 highs and addtionally in course of 2019 rally year. Was long-term monthly resistance then.
==> Usually best short for the activated next test of the 1*1 Global Bull Market Support Angle test is March 2020 Dead Cat Bounce main resistance upmagnet area at 26960-27300!
Yes, this baby with +90% odd has to test back another most important global bull market support rapidly what obviously is the 1*1 Angle out of this August 2015 Low.
BEWARE: Such work off not automatically means that the NQ # has to close or will close below its 8050 pts crash wave continuation trigger!
Last test of 1*1 Global Bull Market Support Angle, the last 100% accurate successful test, happened at famous 2018 Xmas Low. There where the rally panic of 2019 began! Next test of 1*1 likely will come true until end of April.
For March 2020 the 1*1 is at 23840.
For the April candle the 1*1 runs at about 24025 pts.
And this likely due next test of the 1*1 Global Bull Market Support Angle then decides if stock markets will open the trapdoor to Armageddon or alternatively the bull market resumes – what still should be our preferred outcome.
Yeah, current bear panic looks worse and is somehow backed by fundamentals but usually the 1*1 above will be defended with about 65% likelyhood at coming test, followed by a next strong multi-month rally move = buying panic what will be able to print higher alltime-highs into September 2020!
The possible upcoming signals at 1*1 should be quite easy to interpret.
Since August 2015 no single monthly close below 1*1 Angle is seen. Therefore the very first month close below 1*1 Global Bull Market Support Angle should open the trapdoor to at about 22414 pts 50% Fib retracement/Blue Arc backtest yearly support magnet towards summer 2020.
IF a perhaps due 2020 crash month does finally close below 22000 pts crash continuation rail the possible Global Meltdown Main Downtarget is at about 20700-20000 pts 61.8% Fib retracement/Blue Arc/1*2 Gann Angle TRIPLE backtest yearly support magnet towards year end 2020.
==> HOWEVER and USUALLY the 1*1 Global Bull Market Support Angle AGAIN will be defended at next, likely soon due backtest, followed by the next – then final - bullish panic wave into September 2020 what usually marks the end of this bull, followed by a deep & hard drop what should be very first downwave of a new multi-monthlong bear market leg.
I would like to point out that something can now happen what investors/traders have never experienced before. A stock market panic cycle or crash cycle that could last for months, caused by a virus that could lead to a global pandemic that could paralyze entire economic areas, countries and all this in the age of trading machines and algos that should normally carry out and reinforce some trend movements, cyles and waves faster than in 2007/2008 Financial Crisis.
For this option we take a close look to W.D. Gann`s Financial Master Plan that originally was compiled by him in 1909. The guide, to how the individual trading years should behave:
And we see that these predictions for this 11-year bull market are so correct that it really scares what's in store for us.
The Master Plan forecasted the starting year of this bull, the important higher 2015-2016 bull market lows and finally to the T the unusual strong rally year of 2019 which was panic buying time frame as markets literally just rallied from very first into very last trading day of 2019.
And now this onmious prediction for 2020: „PANIC". At the moment and after this last crash week anything or at least a lot points to a started strong and longlasting crash wave.
But stop! What else can a panic cycle lasting several months in 2020 mean? It can also lead to wild and unusual ups and downs! To insane high volatility moves in both directions.
Please remember what can happen in a
bearish panic cycle:
Unpredictable Central Bank intervention and stimulation. And I'm not just thinking of the announcement of a „surprising" -0.5% interest rate cut after the next FOMC meeting. Active intervention in the marketplaces and stopping sell-offs and human panic are also perfectly feasible measures.
Intervention by governments to support the markets from falling apart. Currency manipulation is a proven tool. Stock exchange shut downs as after 9/11. Fresh, current example: Today, the German Government threatens the stock bears to launch a stimulus package to support the economy if necessary.
Limit up and limit down phases. Futures traders in particular must be afraid of this.
Banning of short-selling stocks, as it has happened for the Chinese stock markets a month ago. This seems to be a very, very effective way to contain bearish panic. This is why the Chinese markets first have been rising for some weeks instead of falling apart in later course of February.
And possibly many more, beyond our imagination!
All such unpredictable actions can make a big impact and usually feed the panic energy - no matter if positive or negative! Hence "panic cycle"!
Among financial experts in Germany, this analogy is now going viral.
I certainly don't want to be a prophet of doom but the proportions of the Dow Jones over the periods
October 1971 – 1974
October 2018 to the present
are damn close.
=======Forewarned is forearmed!=======
Yesterday the coronavirus arrived here in Bonn, Germany. I hope that at least this will end well. So don't be surprised if our GUNNER24 Services have to pause at some point due to illness.
And please remember this important things:
In long panic cycles CASH is KING, so the experience! At the end of this panic, millions of margin calls can occur. Hundreds of thousands of traders and investors may have gone bankrupt because of high volatility, wild & unlogical swings, too tight stop-loss management, the selection of inadequate trading instruments or too much leverage, too small accounts and lack of experience or time.