SPX (S&P 500 Index)
What To Watch For Before Stock Market CrashesWhen I asked my members for topics they would like educational posts about, this one came up. I chose this one as its widely suspected that we COULD see another market crash soon, so its best to know what to look for before it happens.
VIX
One key chart you will start seeing react is the VIX. This is the Volatility Index, or sometimes called the Fear Index because it measures the predicted volatility the market as a whole expects. Typically when you see the VIX rise, it means we can suspect to see stock market prices start to fall.
This is because usually market increases are a slow steady march upwards over time whereas any crashes are highly volatile.
Please take some time and compare spikes in the VIX chart to the timeline on the S&P.
SPDN
This is a chart I watch constantly, and should be a member of your watchlist too. The SPDN chart is an inverse ETF of the S&P500, in simple terms when the S&P falls, this rises and vice versa. This goes one step further than just predicting volatility, it shows you where investors are actively betting on a market crash.
Clearly this is a strong indicator of which direction the market participants expect the market to move.
Its important to watch volume on this chart, not so much price - because you are interested in times investors are moving money into this asset.
You will see a large increase in volume before many recent crashes.
DBPK does the same for European stock markets.
Fundamentals
Anyone who has watched The Big Short will understand how a clear understanding of economic fundamentals will show you when and where to expect market crashes. This movie dramatises how a small group of Wall Street investors predict the 2008 financial crisis, and subsequently profit immensely from it.
So it will definitely pay to take the time (years and decades) required to truly understand market economics and the fundamentals of the financial world so that you can identify weaknesses in the framework of the stock market too.
My Current View
I personally posted about this very topic where im seeing some of the typical warning signs before a market crash happen RIGHT NOW. I have linked to this post where I go in a little bit more detail about the current climate in the related post below.
Bitcoin comfort - S&P Historic Closing Week using MACDFor range construction see below. NOT ADVICE. DYOR.
FOR BITCOIN: Posted 3rd July
Weekly close outside of this range. What are odds of a trap
CONSTRUCTION
Created signal with two MACD's. One the default and the other customized. Start range when one MACD crosses to positive and close range when the next to cross to positive is the other MACD , and vice versa. Colored ranges represent different combinations of pairs. CAVEAT- small sample size. NOT ADVICE. DYOR.
Have superimposed MACD's over SPX chart.
Follow direction when weekly close breaks out of range. No whipsaw/trap so far. CAVEAT - small sample size. NOT ADVICE. DYOR.
FOR S&P: Posted 24th July
To the rescue: S&P 500 - 5th Historic Closing Week since 1871
Check out stat. SPX needs all Signal & MACD from 0< to >0 to (sources: high; close; low)span more than 6 WKS NOT ADVICE. DYOR.
SPX is now in a very good place.NOT ADVICE. DYOR.
Mark all points where signal line crosses from 0< to >0 (orange bar)
Then edit as follows. Pick points where Histogram (green bars) prior to crossover follows same movements + & - as BB%B (range = white box).
Then mark first point where histogram and BB%B go in opposite directions (white bar) following crossover (range = yellow box)
How to trade the Netflix bear flag post results Here we have a bear flag continuation pattern to the downside in play on Netflix ahead of results.
Netflix can be extremely volatile when it posts after the closing bell today. The best trade set up here would be to look to buy the break of the bear flag below if it starts to retreat back into the bear flag. That's what us pro traders call a fakeout buy signal.
Alternatively if the bear flag fails and prices rally above we might also consider going long. Even though we see a bear flag what we must really see is the very strong moving averages on the 1hr and 4hr charts.
Any heavy selling of the bear flag would negate any longs. I'm not interested in shorting Netflix though while we are in Lockdown and everyone is watching TV lol. Nor when the Moving averages (particularly the daily and weekly) are so bullish.....
Let the trend be your friend and look to buy dips as and when you can.
#VIX índice de Volatilidad Entre 0 y 20: hay poca volatilidad en el mercado, los inversores tienen confianza y el S&P500 está en principio en tendencia alcista.
Entre 20 y 30: los inversores empiezan a preocuparse, lo que conduce a la volatilidad, la tendencia al alza del SP500 puede continuar pero también comenzar a revertirse.
Entre 30 y 100: ¡es el pánico por parte de los inversores! La volatilidad es particularmente alta y probablemente estamos asistiendo a una fuerte corrección o incluso a un colapso de los precios del SP500 y de los principales índices bursátiles.
Weekly close outside of this range. What are odds of a trapExample: Create a signal - doesn't matter how. Create a range. Use A.I. to minimize whipsaw by optimizing signal and range. Execute A.I. strategy using both traded options and futures. Simple.
CONSTRUCTION
Created signal with two MACD's. One the default and the other customized. Start range when one MACD crosses to positive and close range when the next to cross to positive is the other MACD, and vice versa. Colored ranges represent different combinations of pairs. CAVEAT- small sample size. NOT ADVICE. DYOR.
Have superimposed MACD's over SPX chart.
Follow direction when weekly close breaks out of range. No whipsaw/trap so far. CAVEAT - small sample size. NOT ADVICE. DYOR.
The Importance of Correlating Assets Hello Traders,
In today's lecture I'm explaining the importance of monitoring correlating assets to help give us early clues about the major asset we're looking to trade.
When trading EURUSD, I like to look at 6 correlating assets. They are as follows:
GBPUSD
DXY
GOLD
SPX
DAX
I hope you find this video to be informative and educational to allow you to add correlating assets as a strategy approach when trade planning.
Always remember to trade safe - trade well.
~Michael Harding
XLF approaching the demand zone.CURRENCYCOM:XLF is approaching the demand zone. A breakdown & close below it will start its downtrend again.