It is not when two of the greatest stock market crashes in history ended that is of such great interest and intrigue this weekend, but instead, when did they begin? The pattern that is setting up, especially toward the end of last week, suggests that we are on the cusp of another great autumn crash.
Minimum Expectations: Without The Drama
The CNN Fear & Greed Index has dropped out of EXTREME GREED for the first time in a month. What does that forecast for the immediate future, i.e., the next 6-8 weeks?
CNN Fear & Greed Index
Minimum expectation is for a S&P drop to its 125 day moving average, about 4200 on this chart. A more realistic projection would be to overshoot the 125 MA and then back up to kiss it from underneath. Note on the SPY charts above and below how far price fell below the 125 MA at the Wave (1) lows in October, 2022.
This is the SPY Trading Model we trade in our Blue Line Premium Service ($99/mo), with my EW labeling that is forecasting a Wave 3 decline in the weeks ahead. The worst-case expectations range from a dip below the 125 day moving average (380-400) to something more in line with the 1929 and 1987 market crashes, taking SPY closer to 300.
Bottom Line Forecast
A decline in SPY from its current level @ 444 to at least test round number support @ 400. How fast that develops will provide clues as to the chances of something much more dramatic occurring to the downside.
Suggestion: Sign-up for daily monitoring of the market and our trading models going into this critical three month period. By November the dust will have settled and the real fun (read: TSLA) will begin.
Discount Code for New Subscribers: GOPRO@50% (for 50% off first month, either service).
SPY Puts: Oct 20th Expiration - 77 days
Expected gains without a crash = 5X to 10X
With a crash: Cybertrucks for all