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The current shock in the stock market made me wonder where are we in terms of previous crashes. So I went to http://www.tradingview.com and pulled up the chart of DJI (Dow Jones Index). DJI has data from 1914, more than a century worth of data is a good place to start. Going over the years few notable crashes popped up:- 1929 – Great Depression 1987 – Crash 2008 – Great Recession 2020 – Corona crash Spanish Flu happened after World War 1 (1918-1919) and DJI went up. But to note, DJI had a selloff during World War 1. Let’s dissect Read More

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Introduction: Market trend comprises of extend and duration. Which means how far did the market go in one direction and for how long? But even if a market go in one direction, sometimes severly, the overall trend does not change direction. This was surprisingly true on crash of 1998 and 2011. Hypothesis: Bear market starts when SPY closes below the open of the month (Red Months) for 3 or more months followed by SPY  not able to close above its monthly open(Green Months) for  3 or more months. SetUp: Go to www.tradingview.com –> Type SPY in box before Launch charts Read More

Fed has made it clear that there will be likely 3 interest rates hike. Next week Fed meeting will likely start the first hike. What happens when there is a interest rate hike? The rate to borrow money becomes costly.  So the companies which runs on debt starts to become less profitable. Mortgage Lenders lending rated goes down — Like MBB, FNMA, FMCC, GNMA see drop in sales Auto companies sales goes down — Like F,GM,TM,HMC,TSLA,THO,WGO see drop in sales Real Estate Developers sales goes down — IYR, ARE, AVB, GRT, HT, LXP, RPT, RYN, HOT, DCT, AXR, BXG, COR likely Read More

“Market is simple but not easy” A simple 10 day simple moving average crossover(10 SMA) (blue line on the chart above) almost always captures the majority of the trend. The hard part is to believe this simple rule when market closes above 10 day SMA 2 days before election. In the flip side, a day before brexit vote, market closed above 10 SMA and gave a 2% loss. In May 2016, SPY closed above 10 SMA 3 times and worked only 1 time. In Aug, Sep and Oct 2016, every close above 10 sma resulted in a loss. This is Read More

  The above is yearly chart of the ETF SPY which mirrors S&P 500. Based on the number of red years and the following green years, we can say that this market can continue upwards in 2017. This is also the first term of a new President which is generally bearish so lets see how the year really turns out.