What’s wrong with this market rally and why you should be concerned

The post-Brexit has some interesting development where the market not just recovered all the losses but creating a new high. The market is now speculate that more stimulus will be released after Japan Shinzo Abe won the election with majority seats and his policy direction is on more stimulus. On another hand, BOE central bank also more toward stimulus and rate cut after Brexit as a measure to stabilize their economy. They surprise the market on 14th July that they still hold their rate on 0.5% but then the market still continue the upward trend without hesitation until market close it undergo slightly weakening.

Currently the market is trying to reach its upper BB which is around 2177 and once break trying to test 2200 round number. With current market condition, the index is pricing most company in a very expensive way. Who is on the side to push the market higher, this is a question for us to ponder about, with technical traders, currently they are riding the upward trend.

The current market development is those big players who are collecting since early this year when the market hit 1800 to 1830 area, the development they are looking for where they are trying to create The “Spring” which is a term coined by Wyckoff. Where the big players passing their position to those technical traders who believe market has breakout and then when they complete their realised profit, they start to loaded short position on an extent that needed, of course it will achieve what they want now with most players are opening long positions which are the demand they needed.

If the market collapse, immediate support is on 2091 which is the 20 days and middle BB, then 2045 the 200MA, then 2010 bottom BB and all the way down to 1828.

The downside risk is too great now.

 

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This prompt a lot of market players said that the current situation very similar with 1987 market crash.

600px-Black_Monday_FTSE.svg600px-Black_Monday_Dow_Jones.svgS&P_500_index_around_the_time_of_the_crash

Anyway the market development for the next few weeks will be interesting with FOMC announcement and interest rate decision coming up.

Have a safe trading and investing pals.

Disclaimer:
The information that contained in this article is to provide general advice and for information and educational purposes only. Any opinions, conclusions or other information expressed here does not constitute financial advice. They are given on a general basis and is subject to change without notice.
Any expression of any trading or investment idea is for sharing only and does not constitute an invitation to trade or investment advice. Readers will need to determine, with or without the assistance of a person licensed to give personal advice, whether any general advice received is appropriate for them given their particular needs, financial situation and investment objectives.
While all reasonable care have be taken to ensure that the information contained here is accurate, it does not guarantee the accuracy or completeness of the information. The blogger for this post will not be held liable for any losses resulting from any errors, inaccuracies or omissions in the information or from the use of the information. All information stated are presented strictly for educational purpose. It should not be viewed as an advice to buy or sell certain securities.
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