The parabolic jams & the aftermath

Found two compelling parabolic arc “jams” recently and in both instances, it worked beautifully (and instantly). I am sure this could have been applied to  a lot of stocks & indices considering the bull run we have seen over the last 8 years and the multiple new all time highs in stocks, indices as well as cryptos.

The first one I saw was on ETH (posted to Twitter / StockTwits on Jan 10 2018). What was compelling in this case was that BTC had already started falling while ETH stood strong but clearly the price was getting very close to the curve & so it had no choice but to hit the curve and bite the dust. The forecast chart was posted on Jan 10 and ETH saw a high of 1423 on Jan 13 before falling more than 50% to 700 level by Feb 6.

Ethereum Jan 10 2018

The next one I thought to be interesting was the SPY chart. All 3 indices – SPX, DOW and Nasdaq had similar patterns but I chose to focus on SPY chart and posted this to Twitter / StockTwits on Jan 30, giving the price 1 – 6 weeks to jam against the curve and turn bearish. And the fall started within a week and now I am convinced SPY will soon be hitting the 234 and 218 mark.

SPY Jan 30 2018.PNG

Why 234 & 218? See the current (Feb 12, 2018) forecast on SPY below:

SPY Feb 12 2018.PNG

In my view, the spine of the markets was broken last week and that has absolutely changed the market trend to bearish (not the Long Term trend but the Short Term trend). Blame it on the new Fed chair, inflation, past euphoria, rate hike optimism, politics or profit taking (or the bluemoon-bloodmoon-lunar eclipse) those two days of 1000+ point drops on DOW had certainly shaken the market and changed the market perception.

I expect very big swings & high volatility to continue in February and March and I do not expect a new ATH any time soon as recovering from the lows (and the forecast lows as above) is going to take a lot of time. Having said that, one doesn’t have to be a perma-bear. Though I expect the  market to be overall bearish for the next few weeks, it will provide huge enough swings for smart traders to play both ways, especially with volatile stocks. Happy Trading!

About Venkat Pulakkad

Entrepreneur, management consultant, blogger & forecaster. Founder of Flourish Research Media that provides insights on markets, trading strategies & risk management. Currently an active trader with 20+ years of experience trading Forex, Stocks & Options. Areas of interest: Trend / Swing trading, Macro-tech analysis, building trading strategies, deploying Risk Management techniques, and helping / coaching traders to become successful traders. Twitter link: https://twitter.com/Flourish_Venkat      
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