Market sharply declined during the last 3 days, bringing the SP500 down to 1305 level. It is a huge decline of more than 115 points in 1.5 months. As mentioned before UST gave a sell signal on April 5, 2012. This decline is even more severe in the Global Stock Index.
This breakdown has been so severe that the major indices have declined continuously for 10 out of last 11 days. Although this kind of market decline suggests that the market is in a strong downtrend, it also has pushed the markets into an oversold territory. Therefore, there can be a oversold bounce in the near future. However, one must keep it mind that the markets can remain oversold for a long period of time, like they remained overbought for a very long time in January and February 2012.
This observation forces us to look at the market participant's sentiment to gain some insight into the market's bottom prospects. As of today, few sentiment measures are exhibiting excessive pessimism, while majority of these surveys are not showing excessive pessimism. This kind of behavior tells us that the market is not yet ready for a major bottom. I will try to update the Market Matrix over the weekend to better understand the market's internal strength and potential buy signals.
Please note that it was mentioned in the last post that a VIX based buy signal was generated. However, the buy signal was never completed. In order for the signal to be generated the VIX has to decline sharply. At the moment, it seems like the market will continue to decline and the VIX will continue to rise without generating a true buy signal. One reason supporting this possibility is the fact that the VIX is not at a high which has corresponded to previous market bottoms. Therefore, it should rise further for true panic to set into the market place.
In terms of market structure, the Russell 2000 has just completed a Head and Shoulders topping pattern. This pattern signifies a significant market top. The target of the pattern is around 720/730 (shown by the line below). If the small caps have topped, it would mean that there are some serious problems in the economic system of the country such has liquidity issue and other fundamental issues, which will come to the limelight in the near future.
Please note that the long term chart of Russell 2000 shows a very interesting technical, fundamental and socioeconomic picture. We will share these on this blog in the near future.
Blog Notice:
As you might have noticed that due to limited time UST was not updated regularly over the last 3 months. But now, we will try to update this blog on a regular basis. Every day brings new developments in the financial markets ranging from Greek Bank Run to Facebook IPO. Every news has unique global implications and there are different ways of taking advantage of these developments. We would love to share every possible market aspect in an objective manner with our readers, however, everything requires time, research, effort and monetary expenses.
At the same time, we want to be different from the main stream financial blogs by being accurate and accessible to the general public by being free for as long as possible. Alongside these ambitions, it is always rewarding to be paid for unique market analysis, different analysis techniques and other time based models.
Therefore, UST is introducing a unique "Voluntary Performance Based Social Bonus Model (VPSBM)". In this model, reader will award the UST team with performance bonus based on creative, interesting and actionable articles, analysis, and ideas. In this way, we will be encouraged to write objective market analysis on a regular basis and you can choose the payment time and amount.
It is like a hedge fund but only voluntary. Unlike hedge funds, we will not automatically deduct 2% as management fee and 20% performance bonus. But we will make good relationship with our readers and probably make more than 20% if our advice helps our readers. Please note that subscriptions become important when readers sky-rocket, in order to limit access to proprietary trade information.
Some of the Analysis which will be presented will include:
1- Market Matrix Analysis
2- Trading Algo Updates
3- Inflection Point Model Updates
4- Market Matrix Analysis
5- Market's Structural Analysis
6- Global events and overview of markets
7- Personal economic development
8- Unique long-term investment strategies
Furthermore, we will be writing several research papers on Market Correction (time, price and sentiment), Stock Market and Asset Allocations, Stock Markets and Personal Careers etc (if there is interest from the readers)
Please use PayPal to send performance bonuses (VPSB) to: us.thrive@gmail.com
This breakdown has been so severe that the major indices have declined continuously for 10 out of last 11 days. Although this kind of market decline suggests that the market is in a strong downtrend, it also has pushed the markets into an oversold territory. Therefore, there can be a oversold bounce in the near future. However, one must keep it mind that the markets can remain oversold for a long period of time, like they remained overbought for a very long time in January and February 2012.
This observation forces us to look at the market participant's sentiment to gain some insight into the market's bottom prospects. As of today, few sentiment measures are exhibiting excessive pessimism, while majority of these surveys are not showing excessive pessimism. This kind of behavior tells us that the market is not yet ready for a major bottom. I will try to update the Market Matrix over the weekend to better understand the market's internal strength and potential buy signals.
Please note that it was mentioned in the last post that a VIX based buy signal was generated. However, the buy signal was never completed. In order for the signal to be generated the VIX has to decline sharply. At the moment, it seems like the market will continue to decline and the VIX will continue to rise without generating a true buy signal. One reason supporting this possibility is the fact that the VIX is not at a high which has corresponded to previous market bottoms. Therefore, it should rise further for true panic to set into the market place.
In terms of market structure, the Russell 2000 has just completed a Head and Shoulders topping pattern. This pattern signifies a significant market top. The target of the pattern is around 720/730 (shown by the line below). If the small caps have topped, it would mean that there are some serious problems in the economic system of the country such has liquidity issue and other fundamental issues, which will come to the limelight in the near future.
Please note that the long term chart of Russell 2000 shows a very interesting technical, fundamental and socioeconomic picture. We will share these on this blog in the near future.
Blog Notice:
As you might have noticed that due to limited time UST was not updated regularly over the last 3 months. But now, we will try to update this blog on a regular basis. Every day brings new developments in the financial markets ranging from Greek Bank Run to Facebook IPO. Every news has unique global implications and there are different ways of taking advantage of these developments. We would love to share every possible market aspect in an objective manner with our readers, however, everything requires time, research, effort and monetary expenses.
At the same time, we want to be different from the main stream financial blogs by being accurate and accessible to the general public by being free for as long as possible. Alongside these ambitions, it is always rewarding to be paid for unique market analysis, different analysis techniques and other time based models.
Therefore, UST is introducing a unique "Voluntary Performance Based Social Bonus Model (VPSBM)". In this model, reader will award the UST team with performance bonus based on creative, interesting and actionable articles, analysis, and ideas. In this way, we will be encouraged to write objective market analysis on a regular basis and you can choose the payment time and amount.
It is like a hedge fund but only voluntary. Unlike hedge funds, we will not automatically deduct 2% as management fee and 20% performance bonus. But we will make good relationship with our readers and probably make more than 20% if our advice helps our readers. Please note that subscriptions become important when readers sky-rocket, in order to limit access to proprietary trade information.
Some of the Analysis which will be presented will include:
1- Market Matrix Analysis
2- Trading Algo Updates
3- Inflection Point Model Updates
4- Market Matrix Analysis
5- Market's Structural Analysis
6- Global events and overview of markets
7- Personal economic development
8- Unique long-term investment strategies
Furthermore, we will be writing several research papers on Market Correction (time, price and sentiment), Stock Market and Asset Allocations, Stock Markets and Personal Careers etc (if there is interest from the readers)
Please use PayPal to send performance bonuses (VPSB) to: us.thrive@gmail.com
Sounds fair to me. Good work Naqvi.
ReplyDeleteJoseph
Hello? Anybody here? Naqvi. Is this post capable of sending alarms to a cell phone or email whenever someone replies?
ReplyDelete