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Marketcrash

World Wars & US Inflation From 1914This is the US Inflation Rate (YoY) from 1914 until 2022. Symbol is called USIRYY and it measures the Inflation Volatility in the United States. With the War going on in Ukraine, and Russia trying to force its way through, I took the liberty of looking into the following: - How Global Wars Affect Inflation - How US Inflation Reacts to External Wars - How Wars Affect the Financial Markets You can see the time-lines, it's all laid-out in the chart (graph). I took all the Major World Wars and events that significantly affected, not only the US Inflation, but Inflation itself. First of all, the US Inflation Rate (USIRYY) tells me the following: * When the US was involved in a War, we can notice that the US Inflation spiked. * Most of the times when US was not involved in an External War, then Inflation dropped. That's because of War & Uncertainty Sentiment around this "terrific" word. War does not bring anything good, in fact, in only brings bad times. People die and global sentiment gets super-negative. This of course, leads to... you guessed it: Market Crash. Why? Because after or during times of War, there are Recessions and Depressions. Supply Chains are disrupted and the Global Economy falls on its face. What about looking at things from a Technical Analysis perspective? * Symmetrical Triangle: and the only way is UP! I will give you points which I believe are worth keeping in mind for the next Market Crash. First of all, let's be logical about this. Winter is coming and it's only gonna get worse before it gets better. As Inflation spiked to a 40y high, the higher powers intervened, in an attempt to cool the Inflation spike off. I'm talking here about the Federal Reserve (FED) ramping up the Interest Rates. This is the Effective Federal Funds Rate (FEDFUNDS). Can you see the break-out? They want to calm down Inflation, but they can't. Why? Because this is no ordinary Inflationary period, it's a long-lasting thing. One of those hyperinflation, deflation, stagflation, or whatever the heck these experts call it... :) The Volatility Index (VIX) tells me that another spike in Fear Sentiment is inevitable. I'm in love with Elliott Wave Analysis, so I labeled this next chart. This is the United States Consumer Confidence Index (USCCI) and it measures exactly what its name says, LOL. When it drops, people are freaking out. When it rises, people are optimistic and the Markets are going up. Daaaa! With all that said, what's the bottom line here? I believe that periods of terror are gonna hit us all. Are we having World War 3? Who the heck knows? All I know is that there are more pieces to this puzzle: United States 10Y Bonds (USB10YUSD) have reached the Support, and a spike bigger than the Covid Pandemic has started: The 10Y Treasury Note Yield (TNX) have broken out of a 40y down-trend: Isn't it ironic how it synced with the Inflation 40y high? Damn! Germany 40 (DAX, GER30, GRXEUR) is doomed. Fractal sequence, Descending Channel, and a "beautiful" ABC Elliott Wave Pattern. So, how can you prosper from all this? Metals could be a good hedge. Gold (XAUUSD) just broke out of an important Bearish Structure. Maybe it will go up. Natural Gas (NG1!) & Crude Oil (USOIL) however, are showing Bearish Reversals. Bitcoin (BTCUSD) is Bearish until further notice as well. But this may become the new currency moving forward. In times of terror, the banking systems might need to change. Cash and Card is so '00. WHAT'S YOUR TAKE? WAR OR PEACE? Leave your commend down below. Cheers! Richard
ECONOMICS:USIRYYEducation
by Lionheart-EWA
5
HOW-TO: Cosmic Cloud #1📡 INDICATOR Cosmic Cloud 👩‍🏫 HOW-TO CONTENT This how-to shows that even price movement during major events like global market crashes adhere to the indicator levels. ✅ POINTS the price drop starts after reaching a resistance level (top-left chart) or the price drop is confirmed by a downward breakout from one of the support levels the 2020 stock market crash (👑) reaches its lows at various Cosmic Cloud supporting levels 🔔 USEFUL ALERTS Resistance Channel Re-entry ↓ Basis Test ↓↑ Support Channel Entry ↓
TVC:DJIEducation
by cosmic_indicators
How To Play The Markets To The DownsideI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails. They start trading and realize it doesn’t work this way. The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades. How can you make money in a market that is going down? Today I want to show you two strategies on how to do this. Shorting A Stock The first strategy is shorting a stock. So what does this mean and how does it work? Well, it means that you can sell a stock right now even if you don’t own it, and then buy it back later at a cheaper price. This is how it works. So first there is your broker, then there’s you who wants to participate and make money in a falling market. Let’s use Apple AAPL as an example. Let us pretend AAPL is currently trading at $119 & we believe that AAPL actually might go down again to $110. You can make money betting against AAPL in a falling market, and here’s how it works. Now, you want to sell AAPL but you don’t have the shares just yet. So what you would do is you borrow shares from your broker. So your broker is actually lending you 100 shares of Apple, or at least, we’ll use 100 shares for this example. Now, the price at this point doesn’t matter. He’s just giving you the shares and says, “OK, you need to give me back these shares later on.” And he is actually reserving some money from your trading account to make sure that you really give it back to him. Now, you have 100 shares, and you can do with these 100 shares pretty much whatever you want. So in this example, you would sell them. So you sell AAPL , 100 shares of them, at the current price of $119 because you believe that AAPL will go down. So how exactly do you make money? Let’s say after a few days, AAPL , in fact, does drop down to $110. Here’s what happens next. Now you are buying back AAPL at $110. So how much money do you make? If you sold AAPL for $119 and you’re now buying it back at $110, you’re making $9 per share, multiplied by 100 shares. This comes to $900 in profit. Now that you have the shares back, you, of course, have to give them back to the broker. Remember, the broker lent you the shares, so you have to give them back those 100 shares of AAPL , and when you do, the broker releases the money that they held, kind of in escrow, to make sure that you are getting the money back. Now, the beautiful thing is this is all going on in the background. This is what it would look like on a trading platform. So now, I want to trade AAPL , and I want to just sell 100 shares of AAPL . So all I do here is, it says already short minus 100 and I would sell them at the current price of $119.35. So I click review and send. And the broker is requesting almost $6,000 from me. And this $6,000 is basically the money that he’s holding in escrow to say, “All right, Markus, you have to give me back the shares.” And it is that easy. And now if I click on “Send Order,” I would sell the shares. So this is the first way because I told you that I’ll give you two strategies of how to benefit from a falling market. So this was strategy number one, shorting a stock. Buying A Put Option Now, let’s move on to strategy number two. You would buy a put option. “Put” means that you have the right to sell a stock at the strike price. So, again, we will be using the same example of AAPL that we used for the first strategy. So as I just said, we’re pretending AAPL right now is trading at around $119 and we believe that AAPL will go down to $110. This is how this would work. So this is where we are looking at an AAPL put, let’s say here, AAPL put of 119, and it is trading at around $1.80. So here is what exactly we would do. We would buy a put for $1.80. Now, this put gives us the right to sell AAPL for $119. Now, if AAPL really goes all the way down to $100, see same deal here, we actually would make $9 per stock. However, we have to deduct the premium that we paid for the option, which is $1.80. So this means here we are making $7.20 per share ($9 — $1.80). If we would trade one option, one option controls 100 shares, so this means that we are making $720 total. Which Strategy Should You Use? Now, the main difference between these two strategies is that, for strategy number two buying a put, you don’t need as much money. Remember when I went to my trading platform earlier and wanted to sell AAPL 100 shares, that my broker was reserving around $6,000 dollars in my account? Now keep this in mind. According to what my trading platform is telling me, if I want to buy this option, it would only cost me $180. So as you can see, huge difference. In the one case, the broker is reserving $6,000 with the possibility of making $900. For strategy two, buying a put, your broker is only requesting $180 and that is also the maximum amount that you can lose, and you can make possibly $720 here. Summary So this is how you can make money in a falling market. Now, very important, strategy number one, where you’re just shorting the stock and where the broker is lending you the stock, you cannot do that in a retirement account. But strategy number two, buying a put, you CAN do in a retirement account, and you can do this for any stock. Now, you might actually be bullish on AAPL , but if you look at some other stocks right now that we're in a downtrend, for example, ZM , if you say, “Oh my gosh, Zoom is crazy, during the pandemic here,” it went from, what? $50 to $500? You could think, “This is absolutely overvalued and I believe that Zoom will go down to $300” you can use one of these strategies. So you see that all these stocks that, during the pandemic benefited a lot, could actually move lower, this is how you can make money in a falling market. So now you know two strategies how to make money in a falling market, how to bet on a stock that is going down.
NASDAQ:AAPLEducation
by rockwelltrading
1
Assigned With A Wheel Trade & The Market TanksI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails. They start trading and realize it doesn’t work this way. The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades. In this article, I want to talk about what to do when you get assigned with a Wheel trade. Previously, I have shown you the Wheel strategy. It’s a strategy that I’ve been trading for several months and I haven’t had a single losing trade yet, knock on wood. So I received a lot of comments on my videos asking, “Yeah. That’s all good. But what do you do when you get assigned with a Wheel trade and the market crashes?” And that’s exactly what we are going to talk about today. What To Do When You Get Assigned With A Wheel Trade I want to show you how to handle getting assigned when the market crashes by using a real trade as an example where this happened to me, and I couldn’t have timed it more perfectly because a little over a month ago, on October 28th, I was recently in such a trade. The market was down more than 3% and it was a bloodbath. Luckily, this scenario provides me with an opportunity to use it as a template to show you what to do when this happens. The TQQQ trade I was in at the time works as a perfect example, so let me just show you how things panned out. So with this TQQQ trade, had an open P&L of -$2,667. So what does this mean? Does it mean that we do have a big loss here? No. This is only an unrealized loss, and this is how I handled it. I simply followed the 5 steps of The Wheel strategy, and the 5 steps are as follows: Pick a stock that’s going sideways or slightly moving up. Sell a Put Option , i.e. you have to buy the stock at the strike price. Collect Premium and buy the Put back when we see 90% of the profits. If we get assigned, i.e. have to buy the stock, we will sell Covered Calls against these shares to try and sell the shares at the strike price. Collect premium and buy the Call back when we see 90% of the profits. Selling Puts The trade initially started on September 3rd, so let’s backtrack a little bit to really dissect it step by step. TQQQ met all my criteria, and on September 3rd is when I first trading this. September 3th, when I started trading this, I sold 150 put for $0.66, which is $66 because I traded one contract, and one contract represents 100 shares. The next day I got assigned. I got assigned because when you’re selling puts it means that if the stock goes below the strike price at expiration, 150 in this case, I would get assigned. This is exactly what happened a day later when the option expired. So I made $66 by collecting premium, even though I got assigned 100 shares at $150/share, but here’s the deal. Since I sold the put for $0.66 this means that my cost basis, since I keep that premium regardless of whether I am assigned or not, gets lower. So this means that the $150 a share I paid minus the $0.66 I collected per share, brings my cost basis down to $149.34. Now doesn’t sound a lot, but it basically means that the stock now does not have to go above $150 anymore. As soon as TQQQ goes up to $149.34 I’m breaking even. Now if it goes above this, I’m making money. Simple right? Selling Covered Calls Now that we have been assigned, this is where we start selling Covered Calls. When you sell Covered Calls against these shares, the goal is to try and sell them at that strike price of that Call, while collecting more premium. Here’s the trade that I did. I sold a 155 Call for $2.10 on the 10th after realizing 90% of the profits, I bought it back for $0.37 the next day. So $2.10 minus $0.37 means I made $173. And now my cost basis gets reduced by another $1.73. Well, now our cost basis is going lower. Our cost basis of $149.34 drops by $1.73, so our new cost basis is now $147.61. This means that if the stock goes back to $147.61 we break even, and if it goes above we are making money. Easy right? Next, I sold the September 80 Call, the September 18 150 Call, for $0.45, then bought it back for $0.05. So this means at this point we made another $40, bringing our cost basis down by another $0.40 to $147.21. The stock kept going against us. It was going down and this is what many of you are concerned about. “What do I do if the stock keeps going down?” Well, you keep selling premium, and by doing so, you’re lowering the cost basis. Well, what I did next was really cool. Selling More Puts? So next, I sold actually two puts for $110 and $118. So that averages out to $114. Then I bought them back at $0.06. This means $114 minus $0.06. So we made another $108 here. Now I’ll explain in a moment why I sold a put here even though right now since we own stocks, and we should be selling calls. There’s a very specific reason for it, and I’ll explain it to you. Looking back at our trade, we are lowering our cost basis to $146.13. Next, after we sold the puts and they expired worthless I actually sold another 100 put for $2.40 and bought it back for $24. So we made another $216 here. Bringing our cost basis down again from $146.13 minus $2.16 to now $143.97. When To Sell Puts INSTEAD Of Calls So if you are supposed to sell Covered Calls during this stage of The Wheel Strategy, why did I sell those Puts? I already owned 100 shares of TQQQ that were assigned to me, so why risk getting assigned more? Well, I sold these Puts, instead of Calls for a specific reason. At this stage of The Wheel Strategy is where you normally would sell Calls, however, if you are on this part of this strategy, and the market is tanking, you have to make an adjustment to this strategy if the price keeps dropping, to help keep your cost basis as low as possible. These were 100 Puts, meaning if the price would have dropped below $100 at expiration for either of them, and I would have been assigned the shares. If that were to happen, I would now own 100 shares at $100 each, on top of the 100 shares I already own at $150 each. So now I own 200 shares, I paid a total of $250 for, bringing the average price per share to $125. Getting assigned these shares would have lowered my cost basis tremendously. If you subtract the total Premium I received on all of these trades, which was $12.05 a share ($1,205 overall) from the average price per share, which in this case is now $125, this comes to a cost basis of $112.95. This is what the cost basis would have been IF I was assigned these additional 100 shares at $100 each. I wasn’t assigned these shares, however, and my final cost basis was $137.95. Do you see why getting assigned is a good thing? People are afraid of getting assigned, but as long as you have adequate buying power, and are following my methods for picking good stocks, assignment should be looked at as a good thing. Selling Premium You see, this is what the Wheel does. You can sell premium while you own the stocks. So I then sold a $150 call for $1.57, bought it back at 15. So this means that I made another $142 bringing down my cost basis again to $142.55. Now, I don’t want to bore you and make this article too long here, but long story short, as you can see, I sold a few more of the calls and I bought them back. So overall, by just selling premium, even though I still owned the stock, I was continuing to lower my cost basis. At this point, the stock was down $2,770. However, by doing this, by selling more calls and puts here, I was able to make $1,748 in premium. So this means I made $17.48 per share on these 100 shares. So if you take the $150 minus $17.48 right now, right now my cost basis to break even on this trade is $132.52. So as soon as TQQQ goes back to $132. Now, what happens if TQQQ keeps going down? I will keep doing what I’ve been doing, following The Wheel Strategy. I’ll keep collecting premium until at some point, I can sell these shares for a profit. Recap So now you know what to do when you get assigned with a Wheel trade, and hopefully, it becomes less scary for you. I look forward to getting assigned with a Wheel trade because that allows me to sell calls and make even more money. If the stock keeps going down, I’ll just keep selling, and I will continue to lower my break even more and more. So, right now, TQQQ does no longer have to go all the way up to 150. It only needs to go up to $132.52. I just wanted to address this process because I know that many people who are trading this strategy are concerned saying, "Oh my gosh, what if I get assigned with a Wheel trade?” It’s a good thing. It’s a good thing and now you know why.
NASDAQ:TQQQEducation
by rockwelltrading
1
Why Did The Stock Market Crash?Last Wednesday, I warned during my live show that the market could crash soon. And it did... The next day the NASDAQ lost more than 5% – and for the next few days it kept moving lower. And not to brag, but I pretty much nailed my prediction: I said the S&P would correct to 3,400 and then bounce back. Well, I was off by a few points. It went down to 3,330 and then bounced back. Close enough 🙂 So why did the stock market just have a bit of a flash crash? And will they keep crashing, or is the worst over now? In order to answer the question “why are the markets crashing,” let’s back off for a moment and discuss why stocks exist in the first place. At some point, a company may need to raise capital, and they don’t necessarily want to borrow it from the bank. So they sell parts of the company to investors, and these are shares. Let’s take a look at a company like Apple AAPL. They have issued 17.1 BILLION shares. Now let’s compare this to another company that has been incredibly popular this year, Zoom Communications (ZM). They have issued 194.76 Million shares. As you can see, that’s much less. EPS And A Market Crash? So in order to compare these 2 companies, smart people (way smarter than me) came up with the idea of creating a metric, the EPS, or Earnings Per Share. This metric tells you how much a company earns per ONE share of stock that they issue. So for AAPL that’s $3.30 and for ZOOM that’s $0.78. As you can see, AAPL is much more profitable per share that they have issued compared to ZM. No surprise. Now… what does THIS all have to do with the market crashing? Bear with me… you’ll see in a moment. So now you know about the “EPS” – the Earnings Per Share. The next key metric that you need to know is the “P/E” ratio. PE Ratio or Price Per Earnings The PE ratio is the “price per earning,” so you take the stock price and divide it by the earnings per share (the profit) of the company. This PE ratio tells you how much overvalued or undervalued a company is. Let’s take a look at the PE values of AAPL and ZM. For AAPL, the PE ratio is 35.79. So this means that the stock is trading at 35x the profits. For ZM, it is a whopping 490!!! The stock price is 490 times the earnings! That’s crazy! So let’s see what’s normal. Here’s the PE ratio of the S&P 500 companies. Right now, it’s 29.24, so almost 30. Apple’s PE ratio is 35, so it’s close to the average of the S&P 500 companies. But AAPL is a tech stock, and we know that the NASDAQ is the “tech index.” So let’s take a look at the PE Ratio of the NASDAQ. It’s 26.52 right now. Wait, what??? I thought everybody was saying that tech stocks are overvalued??? Well, it seems they are in line with the S&P 500, and it’s also in line with its historic averages. So why is everybody saying that stocks are overvalued right now? And why did the market crash? Well, there’s a simple explanation. Let’s dive a little bit deeper into the NASDAQ. There are 100 companies in the NASDAQ Index, and here’s how they are weighted. As you can see, the Top 7 companies make 50% of the weight of the index. We already looked at Apple and know that their P/E ratio is at 35 right now, and that’s AFTER the correction. So it’s still higher than the average of 26.52 but not too crazy. Let’s take a look at the others PE Ratio: 2.) AMZN: 126. 3.) MSFT: 37 4.) FB: 33 5.) GOOGL: 34 6.) GOOG: 35 7.) TSLA: 907 So as you can see, these 7 companies currently account for 50% of the NASDAQ, and are all trading higher than the average, with AMZN and TSLA being crazily overvalued. And simply put, that’s why the market crashed. At some point, the big hedge fund guys realized, “Oh man, we have some crazy stocks here in our portfolio! They are overvalued!” And so the big guys are taking some profits off the table and SELLING these heavily overvalued companies. And if they “only” sell shares of these 7 companies, then it drags the whole Nasdaq down. So will the market continue to move lower? Earlier this year, the NASDAQ lost 30%. Can this happen again, or is over after this 10% drop? Well, we had this pandemic, and NOBODY knew how it would affect our economy. So the big guys did what they usually do when there’s uncertainty: SELL and sit on a pile of cash, like Warren Buffet. But you’re not earning any money on cash. At some point, you need to invest the money again in the market. And once we had a better idea of how the virus affected our economy, the big guys started buying again. So if we look at this “flash crash” in September 2020, here’s what happened: The big guys – a.k.a SMART MONEY – noticed that some of the stocks that they purchased went up too much, and they sold them to take profits. But they can’t sit on the cash for long. They need to earn money, so they invest it again after values are back to normal. And that’s what we are seeing today: It’s called “buying the dip.” Summary: Why Did The Markets Crash? You should now be familiar with both EPS (Earnings Per Share) and the PE Ratio (Price Per Earnings). And you know that the big guys – the smart money – they’re keeping a close eye on these numbers. If they get too high, then they SELL some stocks and realize a profit, and they buy companies with a lower PE ratio. And THAT is why the markets crashed for a few days – and why they are bouncing back right now.
TVC:NDQEducation
by rockwelltrading
What To Watch For Before Stock Market CrashesWhen I asked my members for topics they would like educational posts about, this one came up. I chose this one as its widely suspected that we COULD see another market crash soon, so its best to know what to look for before it happens. VIX One key chart you will start seeing react is the VIX. This is the Volatility Index, or sometimes called the Fear Index because it measures the predicted volatility the market as a whole expects. Typically when you see the VIX rise, it means we can suspect to see stock market prices start to fall. This is because usually market increases are a slow steady march upwards over time whereas any crashes are highly volatile. Please take some time and compare spikes in the VIX chart to the timeline on the S&P. SPDN This is a chart I watch constantly, and should be a member of your watchlist too. The SPDN chart is an inverse ETF of the S&P500, in simple terms when the S&P falls, this rises and vice versa. This goes one step further than just predicting volatility, it shows you where investors are actively betting on a market crash. Clearly this is a strong indicator of which direction the market participants expect the market to move. Its important to watch volume on this chart, not so much price - because you are interested in times investors are moving money into this asset. You will see a large increase in volume before many recent crashes. DBPK does the same for European stock markets. Fundamentals Anyone who has watched The Big Short will understand how a clear understanding of economic fundamentals will show you when and where to expect market crashes. This movie dramatises how a small group of Wall Street investors predict the 2008 financial crisis, and subsequently profit immensely from it. So it will definitely pay to take the time (years and decades) required to truly understand market economics and the fundamentals of the financial world so that you can identify weaknesses in the framework of the stock market too. My Current View I personally posted about this very topic where im seeing some of the typical warning signs before a market crash happen RIGHT NOW. I have linked to this post where I go in a little bit more detail about the current climate in the related post below.
OANDA:SPX500USDEducation
by JoelWarby
2
Are Markets Really Crashing? (An S&P500 Study) #SnP500Traders, If you have been following the news items on mainstream media or social media, people all over the world seem to be discussing recent fall in indices indicating another market crash and a possible recession. In this study lets look at S&P500 index from almost purely technical point of view. Hit the like button and subscribe if you enjoyed this study. Comment below and let me know what you think of this analysis and what is your opinion in this matter? Are you trading S&P500? Have a great trading week!
UEducation
by vikinsa
2