The stock market continues its collapse today. The Federal Reserve did virtually nothing to alleviate the global slow down fears and the markets responded with massive downside. At this point, the Dow Jones Industrial Average has fallen over 600 points in the last two days. Today, the SPDR S&P 500 ETF (NYSE:SPY) is trading at $113.05, -3.58 (-3.07%).
Knowing the future is key to profits in the stock market. Whether the markets are surging higher or collapsing, there is money to be made. The sell off yesterday did not take a genius to call. Below I will lay out the ground work as to why
InTheMoneyStocks subscribers had the best days of their life.
1. Factored Fed: The markets had been floating higher over the last two weeks on anticipation of major intervention by the Federal Reserve. While the markets were moving higher, things in Europe continued to get worse. This move higher was baking into the cake some major QE3 and manipulation by the Federal Reserve. Simply put, the bar was set far too high. Major intervention was factored in, anything less was going to cause a collapse.
2. Bear Flag: Technical analysis is the key to knowing the future. When looking at the daily chart on the S&P 500 or Dow Jones Industrial Average, a massive bear flag had formed. A bear flag is a bearish pattern which forms when a large drop occurs, then sideways to up action follows for a period of time. Note the chart below.
3. Key Trend Line Break: Take the low from August 9th, 2011. Connect the lows on the chart since then and a perfect trend line appears. The markets closed below this trend line yesterday. This set in motion a break down that will take us to the August 9 lows and eventually lower. Note the chart below.
4. Master Cycle Pivot: Tuesday, September 20th, 2011 was a major cycle pivot date to the downside. This was given to subscribers at InTheMoneyStocks. Shorts were taken. This is secretive material and cannot be discussed. Take the seven day
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The markets are in a tailspin after the FOMC policy statement yesterday. The key was to know the break down was coming and position yourself accordingly. Take the seven day
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Related: SPDR Dow Jones Industrial Average ETF (NYSE:DIA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), SPDR Gold Trust (ETF) (NYSE:GLD), PowerShares DB US Dollar Index Bullish (NYSE:UUP)
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com