Market Analysis

Monster Move

Ok. I’m cheating. I have a secret weapon. My muse. Mella. She of the Big Short II fame. Like all of you we’ve been analyzing where this move may bottom or at least find massive support and I’ve discussed possibilities in Fear and tracked it in The Comeback Kid.

But it helps having a magician at your side. Mella had retired last year, but has came back to Northman Trader to help support subscribers while her big $VIX 90 call was coming to fruition and markets are in crisis mode. She has since stayed on and will remain with us during these challenging times and crisis.

Having swung to big time bearish she was also looking for a turn in markets as everything fell apart last week.

And she finally gave us advance heads up as well for a major counter rally.

The chart below you’ve seen in the Big Short II. It hasn’t changed, it’s just being tracked, but it gave heads-up notice of support and Mella offered this with view of a big rally to come off of that “RIP bulls” support:

Heck she even suggested a retest of overnight lows for a massive move back to 2600 by adding upward arrows to her chart.

That view did not waver as price indeed hit support:

And boom, the counter rally started.

Ripper rally indeed.

And the big follow through today:

Be smart indeed, hence a great opportunity to de-risk and lock in some gains. A 17% rally move in $SPX in 3 days doesn’t come very often. In fact it never comes, it’s the kind of move that happens in bear markets, a classic bear market rally, i.e the 1929 Redux. And the journey continues as you can see in her chart that even more risk remains in markets despite a big counter rally having emerged from the charts suggested it would.

Whatever you want to call it, it was a monster move. With advance notice no less. Thank God Mella is back!

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Categories: Market Analysis, Technical SetUps

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12 replies »

  1. It still could have some legs to the upside. The .38% fib never got tagged. Odds are extremely high, it gets hit before we go lower. Slow down turbo, things don’t happen over night. In an odd note in your analysis, you are saying or predicting $1800ish? However what interests me is that you you label “Bear Market complete” in your chart. Yeah. lol…Bear markets don’t end in less than 2 months. You might want to re-label this. Try putting “First Leg complete” lol

  2. Well I sure got it wrong, thought Monday’s little blip up might have been it and said it would be a while before we saw SPX 2400 again. Ha! less than a day. But I’m still unfortunately confident this is going a lot lower quite soon, hoping it stops around 1800 else things could be getting really horrid on this planet.

    USA still isn’t testing for COVID anywhere near enough, see this almost unbelievable account:

    US cases are increasing 20%+ per day, that’s doubling in 4 days – even with the paucity of testing. If Trump relaxes confinement (fortunately he mostly can’t that’s down to governors and mayors, but he may try to influence) then China is likely to be the biggest global economy before USA gets back on its tottery feet. Oh, and a lot of US folks will die prematurely.

    • Instead of saying “die prematurely” which is precisely if coldly correct, I would rather you say “die unnecessarily” because that puts more of a finer moral point on it. We all die someday, but within the context of this conversation, there is a choice between “die” and “don’t die” and it comes at an economic price, as always. This challenge will test our values right down to the bedrock of our beliefs.

      • Fair point Jorge, my logic and language can be a bit cold at times. We may see how many people Trump has killed unnecessarily by election time.

  3. so far so good. like the 1800 target for the final leg down of the first move. then a long summer counter rally that starts to fade as coronavirus begins to hit again in the fall. then the bear is going to maul down to the depths

  4. Sven it’s not clear above, if you please clarify:
    * what’s the final target for this rebound ? 2600 or 2950 ? There is a line on 2950 writing “final target”. Thank you

  5. These charts are NO GOOD. I can’t even make out the levels. Totally worthless. You got to do better. This was a waste of your time and mine.

  6. Sven, your the man! Fuck these negative comments… They are so brave behind a keyboard. lol

    I’ve been studying your articles. The “big picture” article is solid gold. We thank you.

  7. Sven,

    I asked a few old people today if they would DieForTheDow and they said “nope”, so I’m not sure we have seen the market lows yet. Then I asked the coronavirus if they would DieForTheDow and they said “nope”, so I’m not sure we have seen the market lows yet. Both said “Good luck in all your investments”, so that was nice!

    Be safe out there…

    • After another huge up day, does that make this article even more relevant in terms of avoiding risk, or have any technicals changed indicated a longer or more extended run up?

  8. I do not see how anything but a Virus knocked this Market down. Not a chart in the World makes a difference. That’s what happened.

    It’s all unknown now . Market could continue on , in what some would term the former irrational exuberance or it could begin to dive … that all depends on whether the monetary goosing has the intended effect or the opposite effect.

    The mortality rate and fatality numbers are going to be low and very limited. There will be anywhere from 2500 to 7,000 casualties maximum. That is really very minor in the Flu disease scheme of things .

    The really important question – which will be the determining factor , is whether or not a Therapy or Vaccine becomes available in a reasonable amount of time.


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