Hello traders everywhere. Facebook's decline of over 7% today has put pressure on the entire stock market, especially the tech sector. Facebook fell after reports surfaced that the political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent. It begs the question, should the likes of Facebook, Twitter, and Snap be under some form of federal regulation?
This drop by Facebook is the most significant drop in its stock price in 16 months. The fall is more than 10% below its all-time high set on Feb. 1 and it also pushed the price below its 50-day and 200-day moving averages, two key technical levels.
Key Events On Tap This Week:
The Fed decision and Powell's news conference come on Wednesday.
The Bank of England is expected to keep interest rates and its asset-purchase program unchanged on Thursday. Attention will be on language and the odds for a May hike.
Saudi Crown Prince Mohammed bin Salman is expected to meet with President Donald Trump at the White House this week as part of a U.S. visit.
Company earnings scheduled for this week include Tencent, FedEx, Porsche, Hermes, PetroChina, Nike, Enel, and Oracle.
Hello traders everywhere. Technical traders and the market in general, are closely watching Bitcoin heading into next week. The reason for concern, a looming Death cross. As I noted earlier in the week, Bitcoin's 50-Day moving average has dropped to the closest proximity to its 200-Day moving average in nine months. The last time it crossed below that level was in 2015 where it remained for ten months before breaking out.
The "death cross" pattern occurs when the 50-Day moving average drops below the 200-Day moving average. The idea is that this cross marks the spot where a shorter-term decline is turning into a longer-term downtrend.
Bitcoin has come under growing pressure recently with Google announcing that they will not only ban all ads for cryptocurrencies, including bitcoin and initial coin offerings (ICOs), they will also ban cryptocurrency exchanges and wallets, as it seeks to "tackle emerging threats."
Regulation is also becoming a growing concern for Bitcoin, and the cryptocurrency space as nations around the world are imposing stricter regulations on the use and mining of cryptocurrencies.
Last week I talked about the "death cross". This ominous sounding indicator is watched by many long-term investors. A "death cross" occurs when the 50-day moving average moves below the 200-day moving average. It sounds a little morbid, but this indicator has been useful in the past.
Let me give you some examples of the "death cross" during the past 8 years. Since 2007, there have been four times when the "death cross" has come into play. On January 14, 2008, a "death cross" was signaled and that was the start of the big downturn that lasted until July 8, 2009, when the 50-day moving average moved back over the 200-day moving average.
On July 7, 2010, the 50-day moving average once again dipped below the 200-day moving average signaling a bear trend. That signal came to an end on October 4, 2010, and proved to be more of a consolidation than a bear market.
We had to wait until August 25, 2011 for the next "death cross". This again proved to be short lived, only about four months and in retrospect, looked more like a consolidation that a bear market. That signal ended on January 4, 2012.
All this week I been talking about how the indices were having problems. It started off with the Russell 2000 index creating a "death cross." A "death cross" occurs when the 50-day moving average crosses below the 200-day moving average.
I also discussed on Monday that negative divergences were forming on many of these indices. That means prices are going higher, but are not being followed by momentum. This can be an early warning sign that a correction is coming.
So today's action comes as no surprise, as I was looking for this market to be on the defensive. The question is, how far can these markets fall?
To answer that question, we can use our Fibonacci tool to help us measure some of the key areas that will lend support to the indices. Judging by today’s market action and the fact that tomorrow is Friday, you may want to fasten your seat-belts. As a trader once told me, "they slide faster than they glide."
Every success with MarketClub, Adam Hewison
There's no doubt about it, yesterday was a very ugly day in the stock market. Is this a harbinger of things to come?
Now that the market has the Alibaba Group Holding Limited (NYSE:BABA) IPO out of the way, there really seems to be no more magic to propel this market higher, at least in the short term.
Yesterday CNBC reported that the Russell 2000 index had flashed the "death cross". A "death cross" occurs when the 50-day moving average crosses below the 200-day moving average. Previously this has not been a big deal with this particular index, as it has always recovered a short time later. In light of what's going on and geopolitical concerns, this time may be different and may represent a harbinger of things to come.
The Middle East is another negative for stocks, as late yesterday Saudi Arabia, Jordan, the United Arab Emirates, Qatar and Bahrain joined the US in a series of airstrikes against Islamic State positions in Syria along the Iraqi border. How long will it be before the US has boots on the ground?
As the markets chop around and seem to lack direction, sometimes the best thing to do is just be patient and wait for something to really make the markets move. Yesterday I discussed negative divergences, as we saw many of the formations setting up which can be an early warning signal of things to come. Continue reading "Was Yesterday A Harbinger Of Things To Come?"→