Stock Flash Crash On The Way?
If you are a cycle analyst then you know that something is brewing, but gut feeling alone is not so reliable. Cycles whilea good use of cautious timing is often times off by days, weeks, and sometimes even months. Don't get me wrong, I love cycles and I do believe in astrology to predict possible market making moves, natural occurance, and personal struggles. Lets move on before I start to ramble on about Astrology.. lol.
There are those who predict through a more fundamental reasoning, and the article link below is quite a good read.
On a technical analysis perspective though, the article is weak. Weak in that it cannot show where most of the sentiment trades is at, or how weak / solid a market is despite its new all time highs. I feel that we will be on the way down sooner than later, but we cannot put fear and doubt into our analysis, as that becomes a way for us to miss the boat. Easier said and done, so lets get into the charts of things.
ANALYSIS:
The chart above shows major trendlines that the SPX is ruled by, to some these channels are just a form of trend, but I call these vibrational channels, where price is ruled by these angles. The Stochastics are at OB (overbought). While this suggest a counter trend trade should be made, it is actually the opposite. These OB phases, are a good situation where risk of acceleration to the upside is the greatest. Fundamental analysis will not be able to tell you that, this is an euphoric or positive phase for traders as you can see from its price movement higher. The longer time-frames like the weekly or the monthly is also showing strength, so a continous trade to the upside is where the profitable position is at the moment. If these trendlines start to fail in supporting prices, we should then look back at the Stochastics to see if we are out of the OB range (could mean a start to a reversal or just a pullback for a reset). We will know further when signals either fall behind or accelerate vs its peers.
The lesson here is that news often than not causes us to doubt our own analysis, and while its good to hear from an unbiased source, the article they write is biased in their favour. At the end, its your money and you just need to keep your eyes peeled and attentive.