• Markets have further to fall

    Markets were heavily down on Friday and I believe that there is more downside for next week, at least down to the $2750 support level.





    On Friday morning, I posted the attached Figure, which was telling me that the market was not ready to bounce since higher prices were attracting more selling.



    We can see below that even though the 10Y Treasuries attracted safe haven money, the defensive equities sectors were also under pressure.





    One of the reasons was probably the continued selling pressure on the largest ETFs, which I had been pointing out on Thursday.







    The NQ8 sector (The 8 most liquid companies) also tuned negative yesterday. A snap back up above zero would trigger a buy signal, but I doubt that this will be the case on Monday.



    Conclusions:

    ETFs selling will easily push the markets further down next week. The OB/OS signal of the 20DMF is still well above the OS level. My strategy is to stay short and revert the position when the OB/OS will issue a buy signal.

    I believe that the Fed could cut rates next week, but that it will wait for markets to fall more. The only problem with the rate cutting idea is that Trump has chastised the Fed chairman rather hard last week, which is certainly not the best way to make sure that independent Fed will bow to the pressure.

    Comments 2 Comments
    1. Sophie's Avatar
      FOMC is Sep 18 . Thank you for the great foresight last week. Sophie
    1. Pascal's Avatar
      Quote Originally Posted by Sophie View Post
      FOMC is Sep 18 . Thank you for the great foresight last week. Sophie
      Thanks.

      I was thinking of an emergency - out of the traditional FOMC scheduled meetings - rate cut in case the markets would fall much further down.


      Pascal