• Francois Abley

We very close to the beginning of a Bear Market

Today, Monday, December 17, 2018, the financial markets have finished again in the red. The S&P 500 lost 75 points, the DowJones lost 300 points, while the NASDAQ comes out with 140 loss points. In the Face of this alarming but not surprising observation, the central question is whether or not we find ourselves in a Bear Market? The answer will be given this week by the Fed, this Wednesday, December 19, 2018 at the Fed's minutes by Jerome Powell. At my level, I will stick only to the graph! The pressure concerns between China, Canada, and U. S are just festering to the point where Canadian Foreign Minister Christina Freeland, through diplomacy, would have not allow her fellow Canadians and tourists, not to opt to travel to China as a holiday destination because it Would represent an advanced risk given the prevailing actual climate between these two major powers, through a statement. It has also overheated the financial markets with the disturbing evolution of the bond rates that are about to reverse on all the present phases of their discrepancies between the yield and their maturity. This means that a probable escalation of rates might give a shot of with and prime a Bear Market. The Chinese technology giant Huawei, would negatively support the Nasdaq100 of this tense relationship between the two powers, since Huawei would have planned significant investments on large US technology entities and also the supply A large number of digital solution equipment and terminals for communication and information. These capital and investment allocations were blocked by the US government, which suspected Huawei of including spying tools in its equipment, which led to the arrest of Ms. Meng in Canada. These unintentional blockades and the probable customs sanctions (Trade War) are proving to be accelerators of the recession which is underway.

Sell opportunities
S&P500 crucial level breakout

Short target @ 2320
Sell-off beginning on S&P500

We only hold a thread of a Bear Market when we take a look at these two graphs above because one of the crucial levels that was 2600 was formally broken and we closed below. The imperative area of the 2550-2530 points is imperatively the last of the last ramparts in terms of support to give a hope to the buyers to constitute a pullback, either a bounce and return on the 2600 points before collapsing one. This scenario that I just described is strictly and solely valid only if Wednesday, the FED's boss opts for a speech to the neutral tone or bearish, which would propel the indices towards the rise in very very short term. The opposite case would imperatively be a definitive baton strike to toggle and can make it evolve in a reversal of the bond yield curve which is the central element of the FED's monetary policy and an advanced indicator to predict a recession to come or going.

Cycle of inverted yield curve
Yield Curve Cycle 30 years

Oil also results from the holding of the indices and monetary policy. He who is currently below the global threshold of $50 ($49.20 to be more exact). Personally, I expected this scenario to drop on oil up to the threshold of $47 before it goes back a bit given the pessimistic anticipation about global demand and global growth and half-hearted inflationary expectations. It was my screenplay since November 13th, 2018 and it is still topical.

Global growth slowing drived by oil
Oil below the global price demand (50$)


Futures, equities, ETFs, Options, CFD, and other derivatives used in trading have great potential rewards, but also a great risk of losing your capital. You need to be aware of the risks and be willing to accept them in order to invest in these products. Don't invest the money you can't afford to lose. This analysis is neither a solicitation nor an incentive, nor an offer to buy/sell financial products that will be covered in this blog. No representation is made here, in order to promise easy gains or miracle methods. This is only indicative and informative. The previous results or performances of the indicators, the different techniques and the associated financial products are in no way guarantors of the future achievements.

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