Stock market technical analysis

stock market technical analysis

Stock market technical analysis on its own produces mediocre results. However, when combined with Mass psychology the results are outstanding. From a long-term perspective, this confirms that the super trend of polarisation, loss of personal freedom and massacre of the middle class will continue roughly for 30 years in the West. If we are lucky, it might end in 18 years, but we would not hold our breath, as the trend to elect super idiots into positions of power is in full swing.

 

The MACD crossover (on the weekly charts) is a bit more pronounced now, so unless there is a black swan event, the Dow is on course to (at minimum) test the 37,5K to 38K ranges. Between now and the 1st quarter of next year, we expect sudden surges in volatility. The short to intermediate trend won’t change as long as the Dow does not end the week below 38.8K.

We have a hypothesis regarding market tops. As the market matures and moves closer to putting in a top, the weekly charts have more influence than the monthly charts. When we are in the final stages of the topping game, the daily charts take over and exert more pressure than the weekly charts. At this point, the weekly charts are leading the game, and this pattern usually starts to manifest 3-6 months before a top is in. The count for the weekly charts began in September. It will be interesting to see if this hypothesis pans out.

bnb chart anxiety index

Our anxiety index is another development confirming that the markets are likely to top in the 1st quarter of 2022. It is the first time in almost two years that the gauge has moved precariously close to the moderate zone. Even more, telling is the speed of this move; in less than 10 days, it went from the border (almost) of the hysteria zone towards the perimeter of the Moderate zone.

 

Historical Sentiment values

stock market readings

For the first time this year, we have three back-to-back readings where bullish sentiment is trading above its historical average. The first strong confirmation that the markets are going to put in a multi-week top next year. Market Update Nov 11, 2021

And just like that, as soon as volatility levels rose, bullish sentiment sheds 12 points. This indicates that while a strong to brutal correction is expected next year, it will likely be short in duration, as fear levels will spike into the next galaxy. The market has very few long-term investors today, most are fickle, and when the going gets tough, they press the pedal to the metal and flee to the nearest exit.

Every inflation expert stating the Fed has to raise rates will start to offer “me culpa’s” and beg the Fed to step in. The Fed will only be too happy to oblige. After all, that’s has been their game plan all along. Their new slogan probably is “debase or die”, with the masses fulfilling the dying aspect of the saying. For the Fed is willing to destroy everyone and anything that stands in its way. No organisation is too big to sacrifice.

Conclusion

Stock market technical analysis as stated below when combined with Mass Psychology does yield above average results. A lot of the proclamations we made last year and this year are coming to pass.

So far, the first part is coming to pass. Once the MACD’s complete the bullish crossover, we expect a mini feeding frenzy that will ultimately pave the way for the next top. Novice traders are about to get clobbered; “the term he got beaten within an inch of his live” comes to mind. Market Update Nov 11, 2021

Almost every asset class will get clobbered next year, and if the projected pattern pans out, we can expect a bloody carnage in the high-tech sector. Certain stocks in this sector have refused to pull back, but pullback they will, and when they do, all the fake bulls and baby men will understand the true meaning of this saying.

Bulls win some of the time, and bears win some of the time, but pigs always get slaughtered.

A Tactical Investor must never forget the statement put out in the last update.

Once again, remember, we never panic. A Tactical Investor is last to leave the room and the first to enter. We stroll in, and we stroll out; leave the running to the fools. Market Update Nov 11, 2021

For the next 45 to 60 months, more than ever, one will have to understand that volatility is a traders/investors best friend. But the term volatility will take on a whole new meaning starting next year. After the correction of 2022, expect the markets to experience massive moves in both directions. Some moves will appear like the end of the world is nigh. Still, only the astute investor will recognise opportunity masquerading as a disaster.

We would not be surprised if, after 2022, the Dow routinely experiences round turn moves in the 7K to 12K ranges within 12 months. Round turn implies the move from the low to the high. For example, if the Dow sheds 5K points but then ends the year 7000 points higher, the round turn move would equate to 12K points.

 

 

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