• TennHedge

The Market Crash Is Coming

Look, I'm not trying to be Nostradamus tonight (ok, maybe I am). We've all read the articles on impending market crashes and then thought "yeah right" afterwards. I am just giving my opinion here, I can always be wrong. Let's use our brains here though, global pandemics affect markets (and the world) a hell of a lot more than other oft-bespoken doomsday market crash triggers like hyperinflation, trade wars, or geopolitical disputes. We're talking about a brand-new virus that has no cure at this time, spreads quickly, and has the potential to make many people critically ill up to the point of death. Honestly, if the worst case scenario plays out, global financial markets are the least of our worries. Anyway, I predict that we are about to see a violent market crash this year, much like 1987 or 2001.


Let's get the most recent chart of the S&P 500 up:

I will begin by stating that, from a technical perspective, the way I know the market is likely to crash (given the virus narrative) will be if we break the 200 day SMA (green line on the above chart) and don't reclaim it quickly. If this occurs, I think we test the bottom of this channel, given that this channel has been consistent and reliable as a trend indicator since the bull market began in 2009. As you can see, we are currently well off the recent highs and now occupy a level which is somewhere near the median of the historical price pattern for this bull market, and the selling pressure does not appear to be abating - given that futures are currently down more than 1%.


RSI currently stands at around 27.5, if we are indeed on the road to a market crash, we still have some room to give on the RSI chart historically. December 2018 is as close to a crash as we have come in recent memory, and RSI just barely broke 20 at that time. However, the narrative right now is one of the most powerfully bearish narratives imaginable, as compared to 2018's rate-induced meltdown. RSI reached a low of 11.39 at the lows of the 1987 crash, and 13.11 in September of 2001. I could definitely seeing us test those RSI lows soon.


If we indeed test the bottom of this channel (God forbid we break it), we will see the S&P trading below 2,700 in just the next few months.


How am I going to trade this?


I gave my TennHedge sell signal for the S&P 500 on February 21st via a Tweet, and I have been short via put options in some capacity ever since. However, if we close below the 200 day SMA, as we could very soon, I will change the position size of my short dramatically. If we break that key level, I could short the S&P 500 with as much as 25% of my total portfolio.


I have that Paul Tudor Jones kind of gut feeling about this one.


As always, this is just my opinion, do your own research before you ever make an investment or trading decision.


But don't say I didn't warn you.


Goodnight.


-TH


Disclosure: I am short the S&P 500.


You should always consider seeking financial advice from a licensed advisor before making decisions with your money, and you should not consider anything I write as financial advice but merely my opinion. Getting your financial house in order is a prerequisite for Bitcoin saving, in my opinion.


Disclosure: nothing in this article should be considered financial advice and I am not a financial advisor. Do your own research as everything in finance carries risk.