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Could Stocks Collapse 20%-50% in the Next Six Months?

Phoenix Capital Research's picture




 

A major long-term momentum indicator is flashing, “sell.”

 

Based on the historical significance of this indicator we may be putting in a top and possibly THE top for the bull market that began 2009.

 

The indicator concerns the monthly moving average convergence divergence or MACD.

 

For those of you who like technical analysis, this indicator is formed by two interweaving lines.

 

The first line (usually black on the chart) is formed by subtracting the 26-month exponential moving average (EMA) from the 12-month EMA.  

 

So if the 26-month EMA is 12 and 12-month EMA is 10, the black line would be at 2 for that particular day.

 

The second line (usually red on the chart) is formed by the 9-month exponential moving average.

 

The “signals” come when the two lines connect:

 

1.Anytime the black line breaks above the red line, it triggers a “buy” signal.

 

2.Anytime the black line breaks below the red line, it triggers a “sell” signal.

 

“Sell” signals usually coincide with market tops forming. They also trigger when bull markets END.

 

I’ve labeled the “sell” signals on the monthly chart of the S&P 500 below. We are using the monthly chart because we’re most concerned with timing when a multi-year bull market ends, NOT intermediate swings in price.

 

 

As you can see, this signal has been fairly accurate for picking tops.

 

Of course it’s more of an art than a science when it comes to timing the end of a bull market (two of the “sell” signals hit on short-term tops in 1998 and 2011, as opposed to the ultimate market tops which came later).

 

However, it is worth noting that even during those periods in which “sell” signals only coincided with temporary tops (1998 and 2011), BOTH times stocks staged a dramatic collapse before beginning their next leg up.

 

In 1998, when the “sell” signal triggered, stocks dropped nearly 20%.

 

In 2011, when the “sell” signal triggered, stocks fell 17% and the Fed announced Operation Twist to try and prop the markets up.

 

Moreover, the other times that this indicator registered a “sell signal” (the times when it coincided with THE top for stocks) the markets fell 50% and 57% respectively.

 

So the fact a “sell” signal is hitting now is of massive importance. It tells us that momentum is falling and we can expect a sizable correction in stocks at the very least and a Crash at the very worst.

 

Smart investors are preparing now. The August-September correction was just a warm up. The REAL drop is coming shortly.

 

We just published a 21-page investment report titled Stock Market Crash Survival Guide.

 

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

 

We are giving away just 1,000 copies for FREE to the public.

 

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

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Wed, 11/25/2015 - 11:43 | 6838048 hmn
hmn's picture

Buy the dip...always works.  Fed has your back.  Easy money.

Wed, 11/25/2015 - 08:39 | 6837227 MGA_1
MGA_1's picture

!! How does he keep on posting this crud ?!?!

It's been 4 years now?

Wed, 11/25/2015 - 07:14 | 6837085 redd_green
redd_green's picture

Don't you, like, have a newsletter that says this every month?

Wed, 11/25/2015 - 00:37 | 6836548 fowlerja
fowlerja's picture

Graham...thanks for getting me out of the market..my girlfriend is pregnant with triplets...and I will sure need that money to support them...sure wish you would have given me some timing guidance on wearing a condom...I knew I should not have gone skinny dipping with her...what was I thinking?...you probably already know the answer to that question...so I will leave it at that...

Wed, 11/25/2015 - 01:35 | 6836690 Fed-up with bei...
Fed-up with being Sick and Tired's picture

When your penis, the Black skinny line drooping below your beltline, the red line below your belly button, moves upwards toward that red line, DO NOT STICK IT IN.  It is time for an explosive move.   This explosive move, when articulated towards that black hole on your horizons, and that explosion occurs, pregnancies can be the result, leading the a sudden crash, and all that is left is a bloody mess, normally 9 months later.

Wed, 11/25/2015 - 00:31 | 6836526 fowlerja
fowlerja's picture

A major long-term momentum indicator is flashing, “sell.”

Graham...I can't sell anything...you told me to sell everything two years ago...I go to bed crying every night... I was looking for the big dip..but got the shaft instead...
Tue, 11/24/2015 - 23:04 | 6836137 luna_man
luna_man's picture

 

 

THIS IS NOT LIKE ANY OTHER TIME...more QE/MANIPULATION, than EVER before!!

 

but, I like technicals myself...use them all the time...just don't work in this CRIMINAL "market"

 

 

Tue, 11/24/2015 - 22:52 | 6836091 hungrydweller
hungrydweller's picture

Sweet, Graham.  You're broken clock will be correct soon.  Keep at it.

Tue, 11/24/2015 - 21:42 | 6835730 Schroedingers Cat
Schroedingers Cat's picture

BTFD, BTATH but use stops.

Tue, 11/24/2015 - 21:36 | 6835705 CHoward
CHoward's picture

If I wash my car that's a signal to the gods for it to rain.  I'm not in the stock market solely to save all my brothers and sisters from losing their money and their minds.  BTW - the market is in for a 70-80% DROP...for all you cocaine addled shits.

Tue, 11/24/2015 - 19:46 | 6835256 Chandos
Chandos's picture

Trust me on this, it will crash only when I finally go all in thinking it won't....

Tue, 11/24/2015 - 19:42 | 6835246 wanderer9641
wanderer9641's picture

Was someone hired by Bo Polny to say that?

Tue, 11/24/2015 - 19:42 | 6835245 wanderer9641
wanderer9641's picture

Was someone hired by Bo Polny to say that?

Tue, 11/24/2015 - 19:40 | 6835237 KingFiat
KingFiat's picture

This is not making me nervous, and I am not going to sell my stocks. Even though I think the scenario outlined here is likely.

I am well insured. My long put options will cover any losses on the stocks I hold. And even if we see a total financial collapse, where my options will not be honoured, I am safe: In that case the value of my 5% directly owned gold will probably explode and cover any losses.

There is also a tax reason why I am not exiting the equity market: Where I live the increase in stock prices is not taxed until I sell. When I sell my profits are taxed with 42 percent. Because of this I have a lot of deferred taxes at work for me, giving me profits.

Wed, 11/25/2015 - 03:12 | 6836830 Kprime
Kprime's picture

yah yah, blah blah blah

my wife likes my long put options too.

Tue, 11/24/2015 - 18:58 | 6835072 aztrader
aztrader's picture

Last month before this massive rally, all the charts were broken and out of no where a 200 point rally in the S&P.  What retail buyer would have been buying the market.  This had to be the Fed and that's why they don't want an audit.  If the American people found out that the Fed was printing money and buying the market, I think that we may actually see some hostility from the people.

Wed, 11/25/2015 - 03:13 | 6836833 Kprime
Kprime's picture

my wife loves my massive rally.

Tue, 11/24/2015 - 18:56 | 6835051 lester1
lester1's picture

August 24, 2015 the Federal Reserve's covert stock buying program was exposed. The market was about to collapse, and the Fed stepped in and started purchasing stocks through their primary dealer banks. Reversed a -1000 point  in just a few hours. It was jaw dropping.

 

The Fed buys stocks daily now to keep the markets from collapsing and destroying investor confidence. Obama gave the Fed the green light to do whatever it takes to keep the market propped up!

 

AUDIT THE FED !!

Wed, 11/25/2015 - 03:15 | 6836838 Kprime
Kprime's picture

my wifes jaw dropped when I reversed her and propped up a 1000 points in just a few seconds. HFT

Tue, 11/24/2015 - 22:37 | 6836006 AdolfSchicklgruber
AdolfSchicklgruber's picture

If this is true (obviously...at least probably...is) THEN WHY HAVENT WE STORMED THE FED AND STARTED TAKING PRISONERS? THE HOBBIT SHOULD STAND TRIAL FOR THIS. Obama and his tranny wife should be on their cans for this.

 

Forget an audit. Lets do a World Trade Center and control demo.

Tue, 11/24/2015 - 08:25 | 6831103 dumdum
dumdum's picture

 

 

Many a trader has died (financially and probably literally), trying to pick tops and bottoms. It will crash when it's good and ready.

When? Who knows.

Wed, 11/25/2015 - 17:14 | 6839977 redd_green
redd_green's picture

Best get out when the downward momentum picks up, tho.    Or before.

Tue, 11/24/2015 - 08:15 | 6831060 wareco
wareco's picture

Maybe its just me, but shouldn't the title of the post be Could Stocks Fall 20% - 50% in the Next Six Months?

Tue, 11/24/2015 - 08:32 | 6831122 walküre
walküre's picture

yeah, definitely not just you.. but who knows maybe this is some reverse logic for stocks that seem to go up on vodoo magic?

Tue, 11/24/2015 - 08:14 | 6831059 DontWorry
DontWorry's picture

 20 year backtest - not too impressive.

Wed, 11/25/2015 - 17:13 | 6839970 redd_green
redd_green's picture

yah, they could have gone 22 years, same price.  Sheesh.

Wed, 11/25/2015 - 03:04 | 6836820 hibou-Owl
hibou-Owl's picture

Your Right, I have back tested with Trade Station every indicator I can lay my hands on going back to 1982.

MACD may look good on the surface but shithouse for trading, its way too lagging.

I have two which are my favourites often one will give a false break, but in combination the two are very reliable.

My Position at the moment: 50% cash, 50% Negative tracker EFT. 

 

PS: I have programmed Glen Neely's book on Elliot Wave and use it for entries/exits. Most people I know state Elliot a load of shit, but when you ask questions on the execution I get a blank look.

 

Tue, 11/24/2015 - 22:07 | 6835866 billbengen
billbengen's picture

Absolutely correct. This is no solid nail to hang your hat on, when central banks keep playing games. 

Tue, 11/24/2015 - 19:32 | 6835202 thesonandheir
thesonandheir's picture

Markets can fall??? WHAAATTT!!

 

Nobody on CNBC said this was possible, I call shenanigans.

Tue, 11/24/2015 - 19:48 | 6835260 KingFiat
KingFiat's picture

Don't worry, markets only fall when nobody believe it is possible, Oh, wait...

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