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Thursday, April 18, 2024

Dow 2020 Crash Watch

Courtesy of Read the Ticker

dow-2020-crash-watchThis is now on the table. Let us review three prior Dow volatility shocks.



But first let us remind you of the Sabbatical Cycle (previous post Shemitah Study



Re post of the 7 year cycle chart below. Take 2015 add on 7 equals 2022, which suggests if a bear market does a occur a low maybe found in 2022. In 2015 we had a 12% sell off just prior to the 2016 US elections. 





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Cycle






Back to main topic ..





The most volatile years in the Dow over the last 100 years are: 1929, 1937, 1987



Currently the Vix is above 35, and if this continues to stay high then the crash risk remains.



Fundamentals: The virus effect in the USA is to get worse, and with risk assets priced to perfection a quick and violent adjustment is set to reset prices, or worse begin a deep trend to lower prices.



Here is a list of risk creating news items over the last two years:

– Tariffs, trade War

– c19 Virus supply chain attack

– Central banks out of ammo (unless they change the rules: FED to buy stocks)

– Russia/Saudi oil price war (to attack US Shale).



Bubbles waiting for the pin: 

– World Wide corporate debt

– World wide sovereign debt

World wide Housing market

– US student loan debt

– US shale debt (part of corporate debt)

– Market leading stocks priced to perfection (Apple, Microsoft, Amazon, Google, Facebook)

– Passive investing via ETFs (including, stock, debt and volatility ETFs)

– High Frequency Trading (Algo’s work on the way up and down)

– Central bank balance sheets

– Wall street financial engineering (CDOs, COCOs)

– Zombie Banks (DB, HSBC)


Just to name a few.



Of course the need for cash will explode and contagion selling will occur. Please notice how GOLD is not acting like it did in the 2008 GFC crisis. Gold may escape contagion selling, and what does that tell you.







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2020






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1987






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1937






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1929






Divider







Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



…“It is impossible here to give an adequate idea of the Law of Vibration as I apply it to the markets. However, the lay man may be able to grasp some of the principles when I state that the Law of Vibration is the fundamental law upon which wireless telegraphy, wireless telephones and phonographs are based”…



William D Gann





…”The four most dangerous words in investing are ‘This time it’s different’ “…



John Templeton





..”It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong”..



George Soros







..”It’s easier to fool people, than to convince them they have been fooled”..



Mark Twain





Unless you can watch your stock holding decline by 50 per cent without becoming panic stricken, you should not be in the stock market.



Warren Buffett







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