Dow

[Daytr]

Forever amen! Has this trouncing really had anything to do with the possibility of perhaps a 0.25% rise in rates?
Sure the USD strength has played quite a major role, but that was probably more triggered by events in Europe such as their massive QE program than the US maybe, one day in the never never raising rates.

Looks to me like a good sell zone on the DOW here. Just back to where the last major correction was in October.
Unless I see oil particularly WTI have a sustainable bounce then the worst is still yet to come in my view.
I fully expect to see a debt crisis triggered by the loans & exposure to the North American shale oil production.
The WTI forward curve is still giving them about $7 i.e. $45 on the 12 month, but do you lock that in?
Probably still not high enough to make money.

[Hoop]

OK...two things first
1.....TA (charts) can not predict the future!!!!.....Charts can observe historic trading Group behaviour (patterns /events), analyze various past outcomes to determine a probability of a future outcome.
2.....Below I write and show a chart outlining a dead cat event..This dead cat event has not happened yet and may not.

We have witnessed the sudden drop....so what now??

There are various outcomes which us as investors of any discipline should do now...one is to take a day to day approach, using what knowledge/experience we have to make a decision.
Me being bias towards one form of TA (charting discipline)..this is my personal view below..

Once the buy signals returned at opening on the 25th.. an opposite to panic set in, the frenzy buying is an animal herd behaviour ...its irrational behaviour so the tool I use for that is Fibonacci retracement ..the first major behavioural resistance (excluding the 16%) is the 38.2% mark...so 16270 area is the first target (hurdle) ..surprisingly from the 25th August opening it rallied quickly to reach this 16270 area, as the day went on and nothing more happened the herd got anxious and stampeded again to a new closing day low...What was witnessed was a dead cat event that lasted less than a day..unusual..
The next day (26th today) we witnessed a more traditional reversal (bounce?)..This reversal is still in play.....

so what happens tomorrow and onwards?

We Chartists can look back to see what has happened in past similar scenarios and form some sort of probability of how this present scenario will be played out...
As we can see several patterns and events evolving from now..it is best to take a day by day view and from the results of each day we can start ticking off what patterns and events that won't happen.
Events are short term behavioural structures ...Patterns are longer term behavioural structures...So the first focus is on event and if that possible forming event fails then we look towards the next more complex possible event and if there isn't one then we start to look at various pattern formations that are forming and so on...

Even though there can be smaller patterns and events occurring within a larger pattern, it is some times wrong to assume that a spectacular happening is the beginning of a pattern/event... The event commencement could an ongoing outcome of a bigger pattern still forming..could be that very long term doming head pattern has just formed on an ongoing H&S pattern formation???..if it is then a quick rise back to the 17100 area and more meandering around this area for a few months before it tails of down again...but forming patterns often don't reach total formation so we can only observe its formation as we can't be sure of the outcome.....anyway...I'm digressing

Back to the "now" and focus on the first possible formation which is the dead cat bounce event (DCB)....When to buy when to sell?...If there is a possiblility that a DCB can be formed then we (chartists) should take the bearish view of this rally as a precaution...If we got caught holding shares from the recent fall then we should watch for signposts whether to hold or sell...The chart below shows the signposts by the road ..each one could be a confirmation or a failure for the forming DCB... a failure to rise above any on of the points marked on the chart adds confirmation that a DCB is still forming at it is a "Sell Get Out at once" warning

DCB Failure: ..All of us see a diagram of a DCB rallying up a third (38.2% Fib) after the drop then reverts and falls below the previous low.....but DCB event formations can vary from the more common textbook "bungee jump rebound" type..Market physics can show a bounce reaching near its 100% (86% Fib) so a DCB bounce can not be ruled straight away when it jumps the first hurdle.

More info on a DCB here

[amalgam]

Hey thanks Hoop for spending the time writing such a superb explanation..much appreciate your posts

[Baa_Baa]

Hey thanks Hoop for spending the time writing such a superb explanation..much appreciate your posts

Ditto Hoop, educational and informative.

DOW / SP futures slightly up at time of posting, not looking too confident at this stage. Shanghai opens up and currently drifting lower through the day.

[kiora]

Thanks Hoop.Food for thought

[Valuegrowth]

Janet was never going tallow a disaster to happen this year. They told her to make sure of hat.

So today she got Mr Dudley to signal no cuts ....well played Janet, you doing well

Yes Janet is very smart lady. She does her job calmly without getting stress. I am confident she will do a better job. Media has given too much attention to Chinese stock market. It created panic situation globally. It is time to separate China from other markets and identity attractive markets including attractive frontier markets globally. Despite market carnage there, China has some growth sectors such as food and beverages, automotive sector,consumer and retail sector, culture and sport sector and healthcare sector etc.

Current situation has created opportunities in the USA as well. Falling commodity prices are positive news for both American industries and consumers. Falling Chinese currency is also positive news for American retailers and other companies which source their requirement from China. They will save more money and will spend more. Bull markets will not end easily. In every situation there are opportunities for intelligent investors. Certain industries will benefit more from the current carnage in markets.

http://www.ft.com/intl/cms/s/0/8938c...#axzz3k03ystwn

Upbeat Yellen puts faith in strong US recovery

[Hoop]

Fibonacci Retracement at its spooky textbook best....
A hanging man on Friday....a bearish candlestick giving a warning...
The dead cat bounce event is still in play..

[macduffy]

Morgan Stanley call "the Bottom" on international equities.

http://www.telegraph.co.uk/finance/1...998-bonds.html

[macduffy]

Duplicate post.

[Hoop]

Morgan Stanley call "the Bottom" on international equities.

http://www.telegraph.co.uk/finance/1...998-bonds.html

I'll join a couple of others on ST that view these headline stuff about Investment house newsletters with some cynicism...
Love the quote..."Graham Secker, the bank’s chief European equity strategist, said the sell-off over recent weeks is largely driven by emotion and has little to do with the underlying outlook for the world economy."
Really Graham?...Looking at the top economies in the world (re GDP PPP) 6th Russia and 7th Brazil are both in recession...15th Canada has just recently entered officially into recession..
1st China is a big question mark and 3rd India all eyes here too.

All the media hype on Greece counts to nought as it is 51st on the economy list and an insignificant minnow really in the grand global scheme of things...It's questionable what influence it has on the biggest non country economy area of the world..the EU which is only just bigger than China and USA

As a comparison NZ is 69th ... China and USA are both individually x120 larger than NZ