Search

The Mother of All Corrections

Posted On :

The $ES (S&P 500 futures) and $NQ (Nasdaq 100 futures) simultaneously reached new support levels during the overnight session, from where it should stage a tepid bounce.  But this has been nothing but a case of a 'falling knife'.  Ignore what most pundits deem to be 'support' and an 'extreme' oversold condition;  The truth is the market is unwinding all the growth assumptions made since the mid-2019 lows, and until the S&P 500 ($SPX) completes its reversion move to its 'fair value' of ~2760, the knife is going to keep falling.  By then, the Nasdaq 100 ($NDX) should reach the 7600 area.  Only then will a sustainable relief rally aiming for the 3030 (or a bit higher) area of the $SPX would likely begin, but only to set the stage for the next leg down towards the December 2018 lows.

A handful of charts and short articles should offer insight into my thesis and thought process.

1. Overnight support levels in the $ES and $NQhttp://www.61point8.com/Portals/0/article%20images/2020/20200228/20200228ESNQ2.png
2. Last June's $SPX forecast: http://www.61point8.com/Portals/0/article%20images/2019/20190608/20190608SPX1.png
3. Why the SPX's fair value is in the 2700's: http://www.61point8.com/Portals/0/article%20images/2020/20200227/20200227SPX1.png
4. The $DJT's inability to break out to new highs and where it's heading: http://www.61point8.com/Portals/0/article%20images/2020/20200227/20202027TRAN1.png
5. The $RUT's inability to break out to new highs and where it's heading: http://www.61point8.com/Portals/0/article%20images/2020/20200227/20202027RUT1.png
6. My base case for 2020 (recession and tick-up in unemployment): http://www.61point8.com/Market-Updates-News-Details/ArtMID/883/ArticleID/398/A-Looming-Recession
7. Complacency: http://www.61point8.com/Market-Updates-News-Details/ArtMID/883/ArticleID/395/Complacency
8. The V-Shaped Recovery Bet: http://www.61point8.com/Market-Updates-News-Details/ArtMID/883/ArticleID/396/The-V-Shaped-Recovery-Bet 
9. Gold's trajectory: http://www.61point8.com/Portals/0/article%20images/2020/20200215/20200215GLD1.png

Regards,

Peter

Previous Article A Looming Recession?
Next Article Short-Term Relief
Print
281 Rate this article:
No rating

Please login or register to post comments.