Will the Stock Market CRASH from the Danger Zone?!

Summary

In this market analysis, the speaker discusses the current state of the S&P, emphasizing key indicators like the Mullen oscillator, RSI, and VIX. The focus is on whether the market will make a final high or experience a correction. Trades in Apple, IWM, and Nvidia are reviewed, with short-term positions in place, while the speaker anticipates potential breakdowns or breakouts. The analysis highlights a complex market scenario, where both bullish and bearish possibilities are explored. For real-time updates, the speaker invites users to join the YouTube membership for more detailed trade insights.

Takeaways

• 😀 The cannabis sector (MJ ETF and MSOS) is performing well, with potential for significant growth in the coming decade.
• 😀 The market is currently in a dangerous zone, with potential for either a correction or a final push to a new high.
• 😀 There is uncertainty regarding whether the market will make a lower high and break down, or if it will form one more higher high before a correction.
• 😀 The S&P 500 is holding its 8 EMA, but the breath indicators are weak, with major stocks like Tesla and Nvidia playing a crucial role in market movement.
• 😀 If the big names like Tesla and Nvidia rotate out of the market, it could lead to a significant market drop.
• 😀 Technical indicators, such as the Mullen Oscillator, are showing signs of weakness and the market is expected to continue rolling over.
• 😀 The Money Flow Index (MFI) indicates distribution and accumulation cycles, with the current phase being distribution.
• 😀 The VIX is in a rising phase, suggesting that volatility could increase in the near future, with potential for a breakout from its current wedge pattern.
• 😀 SPY's moving averages are weakening, with the 8 and 20 EMA showing signs of rolling over. The market is also showing negative divergence, indicating potential for downside movement.
• 😀 There is an ongoing strategy with options trades, such as a contrarian play on SPY, aiming for a profit if the market moves within expected ranges.
• 😀 The analyst is watching for a possible new high in SPY or a lower high in QQQ, as part of the market's larger Elliott Wave count, and is adjusting trades accordingly.

Q & A

What is the current market situation for S&P according to the transcript?

The S&P is in a critical reversal zone, struggling near historic trend lines from 1929 and 2008. The market is currently showing signs of distribution, and there's uncertainty about whether it will make a higher high or a lower high before potentially breaking down.

What is the speaker's opinion on the cannabis sector?

The speaker is very bullish on the cannabis sector, specifically on the MJ ETF and MSOS. They believe the sector could be one of the greatest growth areas for the decade and has strong potential for long-term investment.

What positions does the speaker currently hold in the market?

The speaker is currently long on Apple and IWM, while they are short on Nvidia and the broader market, expecting a potential downturn.

What technical indicators does the speaker rely on for market analysis?

The speaker uses several technical indicators, including the 8 EMA, moving averages, RSI, the Awesome Oscillator, Bollinger Bands, the Money Flow Index, and the DeMark indicators for assessing market conditions and potential trade signals.

What does the speaker anticipate regarding the current market's trend?

The speaker expects the market to experience either a correction or a reversal, with the possibility of a final higher high before a breakdown. They are focusing on negative divergence in key indicators and expect a pullback in the near future.

How is the VIX behaving, and what does it indicate for the market?

The VIX is showing expected behavior with a rising phase following a dominant cycle low. The speaker suggests that volatility is likely to increase rapidly when the market breaks out of its current wedge formation, signaling potential market instability.

What are the key factors the speaker is watching to predict a market downturn?

The speaker is closely watching for signs of negative divergence in key indicators like the RSI, Awesome Oscillator, and the Money Flow Index. They are also monitoring the tightness of the Bollinger Bands and the potential for a sell signal when the market forms a new high.

What is the significance of the DeMark indicators in the current analysis?

The DeMark indicators show a 9-count sell signal, which suggests the market might be at a turning point. The speaker is looking for a possible downside move, as the DeMark count indicates the potential for a correction.

What does the speaker mean by the 'contrarian play'?

The 'contrarian play' refers to the speaker's strategy of taking positions against the prevailing market trend. In this case, the speaker is shorting the market despite it being in an uptrend, expecting a reversal or correction soon.

How is the speaker managing risk in their trades?

The speaker manages risk by diversifying trades, including holding both long positions (Apple, IWM) and short positions (Nvidia, the broader market). They are also using options as a hedge to protect against potential downside risk while waiting for the market to either confirm or reject their bearish outlook.