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ecadaret

Up or Down? Market looks like Triple Top/Distribution Phase

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Hi all,

Want to see what everyone is thinking on the market direction. To me, i view it as a Triple Top and we are in the Distribution Phase of the market cycle and i think we likely will be heading lower and still in a bear market. Also, the S&P is hitting the 2800 area level for the fourth time in recent months and it's proving to again be resistance. If you look back into early 2018, we see this level multiple times again. Lastly, V-shape moves are rare and generally speaking, there is a retrace to 50% and can continue lower after some consolidation.

Thoughts?

20190228_S&P500.PNG

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Ecadaret, I have been watching a number of stocks that are following this very same looking thing. I have been waiting to do much for this reason. Most of the ones I have been keeping my eye on look very weak going above any resistance so it may hold true that they are going to dump back down soon. Anything that moves really fast up or down tends to have a correction following so it seems, so another downward correction may be in the works. Just sitting on my hands watching for now. 

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Agree with Ecaderet....market tops can take a while to form but the triple top (technically the third top is still forming) shows that the market is getting "exhausted" every time it tries to rally to a new high.

Anyone feel like the market's been frothier in 2018? VIX has been jumping up and down quite a bit...increasing volatility could be part of the market's exhaustion/toppiness. For us as day traders that's nice...as an investor not so sure how much volatility I can stomace...2018 had at least 2 larger corrections and a bunch of retracements that came after the big drops. I recommend reading a book on the "the big debt crises" by Bridgewater Associates hedge fund manager Ray Dalio which dives deeper into how market and business cycles are effected by debt levels and how you can use that to possible anticipate what might be ahead of us the next few years:

https://www.amazon.com/Big-Debt-Crises-Ray-Dalio/dp/1732689806/ref=sr_1_1?crid=2GYV3553PFOYW&keywords=ray+dalio+big+debt+crises&qid=1554419613&s=gateway&sprefix=ray+dalio%2Caps%2C200&sr=8-1
 

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Yep. We'll see if it fails to break above or fakes out and breaks lower. If it doesn't fail or fake out, then it'll be interesting to see how much more it goes. What concerns me is the slowdown and then the drastic pickup in economic data. When things whipsaw like that in light of the tight labor market etc., it signals caution to me. Also the rebound is steep and so i still suspect around 50% retracement. I'm currently short term swing trading with options at the moment until i see a clear break lower then i'm going to go aggressively short like i did in October and December and then wait for the trend to develop downward, if any.

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