Jump to content

US large caps are a rocket running on empty


Recommended Posts

So I didn't get the wave 4 retrace I was hoping for and maybe that is better because it fits the surely inescapable observation that the current rally phase on S&P500 and Dow is running out of fuel.  Just look at the steep nature on the post Brexit rally on the Dow Daily chart below (same on S&P).  Check the volumes, you would expect a strong bear to be pumped up on high volume driving this sharp move but the opposite is true, the volume is diminishing.  For me it is not a coincidence that this move forms a triangle and that this triangle converges in my top out zone around 19,000 also with convergence of the longer term trend lines from the daily (green) and weekly (purple) charts.


I am not seeking to trade the top here but to identify a likely top and seek an entry Short once this is confirmed.  Either way this move should be resolved soon and the fact that it is all happening around Q2 results in intriguing.  The last 6 quarters have shown declining EPS and topline revenues/volumes yet analysts keep calling for full year growth and keep missing.  This is classic "hockey stick" forecasting, I know, I used to do it for a living...  If we get poor Q2 results the level of back loading onto the second half of the year is simply not deliverable...  How long can markets rise on central bank stimulus in the face of deteriorating fundamentals?  At some point another round of Fed stimulus for the US will emerge and that will mean all the stimulus since 2009 has not worked.  Then the game will truly be up...


Link to comment

Hi Mercury - I've also been thinking that this rally is starting to look weak and am watching out for any bearish signals (divergence etc) that may develop. But I've also been wondering about the volume data you mention. Is it possible to get volume data for indices? Or is there some method for inferring it?


Can I also say that being fairly new to trading I consider myself very much on the learning curve at the moment. But I read community posts with interest, finding many of them both informative and educational, so I'll take this opportunity to say a big thanks to you and the other regular contributors for taking the time and effort to put your trading thoughts into print :-)



Link to comment

You are welcome . I don't seek to be a teacher or anything and certainly do not feel I am yet fully experienced enough to even call myself successful, unless you count success as survival, which after a fashion it is.  I post on the forum to share interesting articles and see what people think of them and post also my analysis and projections to see if anyone disagrees.  Alas there is a dearth of discussion just now, whether because it is the Summer, everyone is jaded waiting for the big reversal, or everyone is just focused on their own day trading I can't say.  Perhaps some of the original regulars have stopped trading...  If things are not going well then taking a break is a good thing by the way.


There are plenty of old threads there people have offered their tips on trading approaches, of which there are many, so a spending some time trawling the forum could be time well spent.  My to piece of advice over and above other points I have raised previously is not to follow anyone else nor seek trading tips but to find a method that works for you, do your own analysis and make your own trades then learn from them.  That said a good discussion, especially with opposing views is very enlightening, I always like to hear forecasts opposed to my own and look at alternative scenarios.


Here is a short article with a set of trading tips included that you may also find helpful




Link to comment

Thanks for the link Mercury. Interesting reading. Some of which I'm already weaving into my trading philosophy, having recently read some of Alex Elder's books.

Particularly his advice on "risk management" - A concept I have come to  appreciate greatly after almost burning my account in the first couple of months (Does everyone go through this? Lol)

Since then I have traded much more prudently. When I enter a position now I set my stop loss rigidly. If I get it wrong and set it too close and get stopped by noise, or too far and consequently take a larger loss than necessary, I simply accept the consequences, try to learn a little bit, and move on. It seems to help, and I've gradually brought my account back to its starting position.

My current focus is trying to determine how to enter and exit positions at optimal points - much harder than I had first imagined (Buy low, sell high seems such a ridiculously easy concept!)


(BTW I've recently read "Mr Nice" by Howard Marks, the international drug dealer, so was intrigued at the reference to him in your link -  'til I  did a bit of googling to find there is another (completely unrelated) Howard Marks!)




PS You didn't say where your index volume data was coming from :-)

Link to comment

Yes Alex Elder's book is a good primer and yes everyone burns their first account.  It is astonishing how many people just start trading with no research or study on the subject.  Even if you know what you are doing it will take time to learn how the markets really work and the only way to do that is to trade live and lose...  I was told once that you need 3 banks (that by a professional gambler).  In fact the podcast interview with Anthony Crudele showed that you need 4...


Re volume I would love to get access to detailed volume data for main markets, I have raised this with IG.  In the meantime I rely on the website link below and commentary from professional analysts via their articles.  In the end it is clear that the current rally is on low volume and there are several credible sources pointing to this fact.  Alas that doesn't tell us when things will fall, just that it is setting up to.  In addition the Vix is low (Bear markets on Stocks always start with ultra low Vix), last time it was this low was in 2014 and the time before that 2006.




Link to comment

Thanks again for the link Mercury. Looks a good website, have bookmarked it :)


Re volume: The S&P 500 does indeed look low but conversely yesterdays volume on the DJIA looked to be about the 3 monthly average. But with my limited experience I can't determine if this tells us anything of significance :/

Nevertheless, the price looks to be drifting at the moment, buoyed only by earnings beats of (low) expectations and the general consensus seems to suggest there is a pull-back in the wind, possibly to around 2130(S&P) and 18200(Dow), although I can't see anything in the charts to suggest it is imminent. Perhaps a lot of bears are just waiting for a trigger; a news shock or perhaps unexpected central bank interference. Time will tell.

Meanwhile I remain just another bear in the shadows :-)


Link to comment


This topic is now archived and is closed to further replies.

  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 26/09/23 17:31
  • Posts

    • PayPal USD is a stablecoin backed by secure and highly liquid assets. It is designed to maintain a stable $1 USD value and is backed by dollar deposits, US treasuries, and cash equivalents. In just few steps, users can buy, sell & hold the PYUSD or even send it to friends in the US without paying fees on Paypal. The stablecoin can be sent to Ethereum wallet addresses that accept PYUSD, used to checkout and pay for items too, though fees may apply here. Need I mention that it can also be used to buy other cryptos as well. Interestingly, developers are not left out, they can use PayPal USD as the payments layer to build new services and products on public blockchains. It seems Paypal has made it pretty easy for users to manage their finances. PYSUD has a market cap of $44.3 million and is listed on tier 1 exchanges like Bitget, Kraken, Kucoin and Coinbase. Do you guys think that PYUSD has what it takes to rival USDT?
    • One of the biggest banks in the UK, Chase Bank, has said that it would no longer accept cryptocurrency payments from UK clients. On October 16th, the prohibition is anticipated to go into force. The region's crypto users have reacted to the bank's move in a variety of ways. While some detractors have criticised Chase for acting without regard for how the financial environment is changing, others have applauded the decision as evidence of the growing acceptance of cryptocurrencies by the general public. Chase's decision is unknown at this time, although it is most likely the result of a number of considerations, including the volatility and fraud risks connected with cryptocurrencies and the UK's lack of regulation.https://coinpedia.org/news/chase-bank-takes-a-stance-no-more-crypto-payments-for-uk-clients/amp/ Chase Bank's restriction on cryptocurrency payments is likely to have a big impact on UK cryptocurrency users, therefore it's important to prepare and have a backup plan in place. Here is a choice I am aware of right now: • Making use of a cryptocurrency exchange with in-house payment processing capabilities. Users would thus be able to purchase and trade cryptocurrencies without the need for a bank account, which is mostly used in peer-to-peer (P2P) transactions. If you live in the UK and want to buy or trade cryptocurrencies, you need do your homework and pick a reliable platform. Please share any alternatives you are aware of with us so we can learn.
    • Hi all, I am looking to open a spreadbet trade for Steakholder Foods but IG seem to currently not allow this. Do any of you know how best I can trade this stock? Looking to buy at around 80
  • Create New...