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Wednesday, October 26, 2022

Your spooky Halloween Trade

Your spooky Halloween Trade 




Occupy! Scenes from Occupied America by Astra Taylor, Keith Gessen et al - review the guardian.com



We Were Just Getting Back to Good Trading, But Could The Market Crash Right Here? 

I started trading during the 08 crash, and later - in 2010 - I predicted a market crash, just ahead of the so called "flash-crash". This was when I used to write, in my public charts area, and just after that, was about the time I started this blog, so I have some previous experience with market crashes. 

I don't use the word crash much anymore, but I think it's very likely... as much as 10%, and with Halloween just around the corner, I think it would be kinda scary, and fun, all at the same time!  

‘Halloween came early’: Wall Street wraps up worst week in months as recession fears mount stltoday.com Sept. 16th, 2022

Crash is kind of a strong word, but I think it would be kinda fun to trade into a scary correction, spook investors, right into Halloween Monday. Maybe even a black Monday, which might be the perfect setup for a Thanksgiving rally.   

Some Technical Reasons for a correction/ crash 

1. We took out the final target, I pointed in yesterday's update, and this looks like one of those moments, where things are lining up pretty well for a correction - or worse - as I explained in my most recent News Letter.  

Adding weight to that target, is the fact that most the tech companies that reported lousy earnings - after yesterday's closing bell - had their share price run up into their respective 50 day moving averages, and dumped, ahead of earnings, and that means somebody knew something. 

Looking at the charts  

I'll give you one example, but as home work, you should take a close look at everyone who reported last night. 

$TXN Texas Instruments - Is this not the most bearish EW count you've ever seen? But what I really wanted to show you is the fact that this was run up into the 50 day ma, and dumped. 

    


This was no accident! This is the oldest trick in the book, the "pump n dump"!

Of course the news will report it, as if investors were caught off guard, but does anybody really think that half the big banks on Wall Street don't know exactly what earnings are going to be, weeks ahead of time?   

2. The Hindenburg Omen - 

You can find the technical definition for this at investopedia.com: 

 "The Hindenburg Omen is a technical indicator that was designed to signal the increased probability of a stock market crash. It compares the percentage of new 52-week highs and new 52-week lows in stock prices to a predetermined reference percentage that is supposed to predict the increasing likelihood of a market crash."

This effect can be caused when you have sectors trading out of whack i.e. Tech, Healthcare, Energy. As I've heard the great Art Cashin describe it, what happens - in the event of a Hindenburg event - is you have a sudden re-balancing. 

Speaking of the rally in Health Care stocks 


Makes sense to me that investors would be hiding out in Healthcare stocks, when they see a recession coming, and so many otherwise healthy, vaccinated people, dropping dead of heart attacks, but does anyone believe Energy is going to out-perform in a slow down?  

Energy 

I guess I would have to admit I was at least early on the call for the second leg down in Energy stocks, and I'm sure it won't be the last time.... 

Most technicians tend to jump the gun, but I'm going to blame this one on investor intelligence, or the lack there of. More on this in a future blog. 

$BP British Petroleum - looks like it's trading into a head-fake wave "b". Yeah, it made a higher high, as it traded into Options Expiration, and I think this is also a nice setup to rob the retail investor, but a crash..? Probably not, but energy does need to sell-off with everything else, and a powerful minor wave "c" fits the bill.      

Of course Tech and Semis will have to lead the declines as usual, and since few are expecting to see a crash here, it sure as hell can happen.




Take Care, 
AA
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