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50% stock market retracement!

August 2, 2019


“Nobody cares about the monthly bar chart.”

If we look at the monthly chart above we can clearly see how from the current stock market top (Emini chart) of 3029.5 to 2007 high of 1586.75 and 2000 high of 1574.25 there’s about 50% difference (calculated on last market high of 3029.5).

Why should we see the market down that far?

Well, there are 5 great technical and fundamental reasons:

1 – The most strong support in the monthly chart is on those 2 great monthly highs mentioned above (it took 13 years to break that resistance, from March 2000 to May 2013).

2 – The trend line that starts from 2009 lows and had been touched in 2011, 2016 and December 2018 should be broken. Nearly all trend lines must be broken in technical analysis. This is a tremendous attraction factor.

3 – 50 day SMA must be broken someday. This is another tremendous attraction factor.

4 – There’s a great broadening pattern forming since January 2018. This should trigger the next big market movement.

5 – RSI5 indicator has a very steap bearish triple divergence triggered. Odds that these divergences break up are very little as we would need a steep long RSI5 trend like that one from October 2016 to January 2018. That’s too recent for the start of another one.

6 – Looking at fundamentals, S&P500 stocks are at least 30% overpriced. 20% more downside potential need to creat an oversold stocks regime.

7 – Last, I think the world entire stock and bond market is already in the Krugman’s liquidity trap. Why should the Fed cut rates while the stock market has been collecting new highs month by month? With future negative interest rates and quantitative easing back on our shoulders, I think at the end we shall see the famous Fridman’s Helicopter Money in action…

I could be wrong… It’s not easy to time the tops. Let’s see.

That’s all folks!

Marco Simioni

Nightly Patterns



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  1. Alex Argyros permalink

    Thank you, Marco. If what you foresee transpires, do plan on trading your gold, volatile, and overnight ES strategies through it?

    Sent from my iPhone



    • I’m sorry Alex for the late reply, I’ve been on holiday for a couple of weeks, and I realized now your comment.
      Well, I’m going on as usual, I’m just trying to be more selective with all the 3 systems.
      I restricted the VIX system parameters, and I’m trying to be very patient with overnight trading.
      Overnight range has tremendously increased, so we must be very prudent.
      I’m waiting for an oversold condition for a couple of long trades. I think probably on next week.


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