Is The Stock Market Crashing | Podcast Episode #35

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Learn to trade, stocks successfully, learn to profit consistently. I’m Ryan Mallory and on my weekly podcast, I’m going to teach you the in and out of a complex ever-changing stock market. You will learn to trade better trait, smarter and profit bigger.

0:26
Now let’s go trade. Hi, this is Ryan Valerie, and I’ve been getting a lot of emails. A lot of phone calls lately from family friends, people trying to make contact me over the Internet, through the website. Just asking me about this stock market because a lot of people are on edge and not really sure what they should be making of This Market action that we’ve been getting ever since October, ever since we peaked in late September, and then the subsequent.

0:54
So off, ever since, I mean, it’s been pretty much Non-Stop and we’ve had some balances in between, but right now, we’re testing. Those from February, we thought those low some February but really way down there. And now all of a sudden today we’ve tested them, we actually went below him at one point and finished slightly above them.

1:11
So there’s a lot in play here and it’s a very dangerous situation and the eyes of a lot of investors because really most people are not equipped to really understand how to manage their money or how to trade stocks in a training environment like this.

1:27
So, what I want to do is I want to go over some of the things that I’m I’m seeing what I would do going forward and how I’m actually doing it myself. So right here, you can see. I’m going to show you the S&P 500, the long-term chart of it if you just look at it from a weekly timeframe.

1:45
It just keeps going up up up and up, but you zoom in on the daily timeframe. All of a sudden you got this topping pattern that’s going on. And what that is is basically when Market stop and they start to reverse course and go back down, they tend to trade sideways for a long period of time.

2:01
A lot of choppiness. And that’s what we’ve had a lot of in 2018 and and then all of a sudden they’ll break a key support level and they’ll really start falling like what we saw in 2008. So right here, this is one. One thing that’s very ominous, it doesn’t happen a lot but it’s called the death cross on the charts and it’s when the 50-day moving average, that’s the, the average closing price of the last 50 days is less than the average closing price of the last 200 days.

2:32
So the red line is the 50-day moving average, the white lines, the 200-day moving average. And now, we’ve got this thing, they call the death cross. And speaking of death cross, you know, I always go by these cemeteries and I can’t always help but But think to myself, you know, how many people are dying to get in there?

2:50
But anyways, back to the conversation here that we’re having about the S&P 500. So this is the February lows, we breached it just a little bit today, but we close above it. The big, the important part is that we closed above the February loads. If we don’t do that, then it starts to become a major issue of where, how far do we drop from there.

3:11
And so let’s talk about that. Let’s look at where we could go. And what we’re looking for, here is support levels. Where are the major support levels that people will start getting interested in the stock market? If we continue to push lower, if we actually start crashing and where will buyers get interested enough to want to start buying stocks again?

3:33
So you have in, this is the weekly chart. Now, that I’m looking at, you have a little bit of support here and 2424 a tiara, which is about 75 points less than where we’re trading at. Right now that I don’t really see that as being a Consequential trendline at all, but you do have a major major area of support, right?

3:54
And here so you can make the case if you look at this support level going back to 2015 2016 that we may actually fall all the way down there and it’s in conjunction with the 200 week moving average which would be the closing price for the average closing price for the last 200 weeks, which is about what a little less than four years.

4:19
What about 2350? So you can make a case there that from 2545. We go back down to 2350, that’s about another 200 points to go. I could actually see it happening. If that does happen, we wipe out pretty much all of the 2017 gains.

4:35
I mean there’s not going to be much left from the last two years or what would most say like the Trump presidency so far. So there’s a good chance of that. Now, one of the things that has really given me some pause from what we saw today is Utilities real estate.

4:51
They tend to be something like the safe havens of the stock market. Your Staples sector that tends to be another safe place for Traders or investors to go into in the market selling off and really taking a beating. Well, today we had this huge sell-off in you, you would typically expect okay it’s probably technology leading the way down or it’s health care or it is discretionary stocks.

5:16
That are that are pushing the market down now. It was utilities and so far up until today utilities had been the real strong point in this market. They had held up really well, but now all of a sudden they’re breaking down and that’s not a good sign either. Because what happens is when when you start getting your the safe havens, when they can’t even be a Bastion of Hope for your for your Capital when that when that fails to happen, then all of a sudden you’re really starting to see where there’s going to be like real Panic starts.

5:48
To hit the market and you’re going to see a lot more selling. So watch the utilities in the coming days. If it continues to sell off like it is that means that means the only the only position that’s worth happiness cash. Or being short, we’ve talked about the future support levels. We’ve talked about how utilities we’ve talked about how Staples and I look at, look at Staples here, if I can type it here, there we go.

6:03
Staples again, this should be a safe place like your Walmart’s your, the places that make like the toilet paper and the the household essentials, those are still going to get bought and a recession but And so they will usually hold up pretty well.

6:28
But here you got Stables, just getting just destroyed today and and on Friday to. So another, another huge concern there, Now, one of the things I tell people because I always get this message here and I really don’t know how to help people when they, when they come to me about it.

6:44
But they’ll say, where should I get out at, if, if this Market continues to get go lower and really, the best thing is if the marketing is to get up, go keep going lower. You should have gone out a lot earlier. But for me, I’m a Trader, I keep a lot.

7:00
I’ve been trading trading short pretty much all month long. So I’m actually up on the month and it’s been a great month. That’s been one of the better months of the year for me. And from a from just a precise trading standpoint in terms of how I feel about how well I’ve been trading, it’s been a pretty darn good month. I think I’ve hit winners on 70% of my trades and that’s to the long and short side because I’ve written one of the bounces so far this month that didn’t last too long, but it still produced some profits.

7:25
But you have to, you have to be willing to be flexible when even as an investor whether it’s an IRA or 401k or or some other kind of retirement vehicle where you’re investing in things like, Investment funds or mutual funds. You need to be able to pull up in the S&P 500 chart.

7:42
And I tell people all this this all the time and no one really likes to do it. But you need to know. Where is the Line in the Sand for you? Where are you going to say? Okay, we’ve been on a rally for the last nine years. It’s been great, since March of 2009. Where am I going to?

8:12
Get out if this thing starts to head south again because you don’t want to really test, you know, 20 or 30 percent drawback, and just for Reference points here, the SP to date is down 4.8% on the earth. The Dow is down four and a half percent on the year. The NASDAQ is down 2.2 percent on the year and the Russell is down at wapping. They’re actually in correction territory, if you just look at it from the Returns on the year, so far 10.2%.

8:37
Now where it gets really interesting is Where is the market at so far this year as it pertains to the sell off from the high. So that’s basically where we’re at, you know, the September highs there, how far are we Fallin the SP, which is your large caps, that’s Fallen about 13 and a half percent. And the Russell is actually in a bear market. Now the Russell is your small caps that’s down over 20%.

8:54
So you actually have a full fledge correction and the small caps right now. And that’s One of the reasons why I don’t really touch the small caps of late because they’ve just been so volatile. They’ve been the lesser of between the the two between the large cap, small cap. So I’ve been trying to stay more towards the S&P 500 plays.

9:12
And but any case no one Advance where you’re going to get out know where you’re going to draw the line in the sand. So, right here, right now if we get like a weekly close let’s just look at it from a weekly standpoint. You can see this topping pattern, we’ve been going up up up up and all of a sudden For late 2017 and all of 2018, you got like a double top pattern where you got two peaks at the equal points.

9:36
And then you have a sideways pattern that really wants to break down here. And so, if the February Lowe’s breaks, that should be for a lot of people to Line in the Sand. But it’s not only known about what what the line of the saying is going to be where you’re going to get out, but you also need to know where you’re going to get back in.

9:54
Because if we have a, just a break below the February lows and maybe we go 100 points down. And then we bounce back up. You got to know when you’re going to get back in as well. So no one or you’re going to get out know where you’re going to get back in and the and the answer is going to be different for everybody. This is a one that’s probably going to work for a lot of people this topping pattern here, but it’s not going to work for everyone and it’s going to depend a lot upon your your your frame of mine or your her.

10:20
How much time do you have to work with? For me? I’m not going to be retiring for a long time, because I’m still pretty young, and I have a lot of time to work with so I’m not I’m not really looking to play every kind of, you know, dip or pull back in the market, on some of my long-term accounts. Instead, you know, I’ll ride with those, but in my trading accounts, I will, I will trade the movements and actually buffer, the losses with my trading accounts that I might be sustaining and my, some of my long-term accounts.

10:48
And usually, I come out ahead as a result. So any case, Be aware that we could continue to sell off hard here. What’s my gut instinct? Tell me. Well, I think probably towards the year-end here. We’re down pretty hard this month.

11:06
I mean, December is on Pace to be the worst trading month of the year, and that’s never happened before. Never happened, December being the worst one, that usually wanted the better months. I actually don’t think that will happen. I actually think that probably either later this week or sometimes, next, you’ll probably start seeing a rally in the market.

11:23
I think one of the good chances that you’ll see happen is that the feds under a lot of pressure, right? But they can’t really succumb to the The pressure that trumps been putting on them about, hey stop law, raising the rate, you’re killing the economy. They need to act independent of the presidency and even though Jerome Powell was appointed by Trump, he’s trying to establish that independence from him.

11:46
So I think what you’re going to see is that they’re going to unfortunately raise rates again. It’s going to hurt buying power, it’s going to hurt our position with China, as we try to negotiate a close to the trade War.

12:03
But he’s going to do it because he wants to keep that mindset. Yeah, we’re independent. But what I think you’re going to see in the press conference and I think what you’re going to see and the fomc statement is some very dovish comments, meaning that they’re going to make it very clear, that they’re probably going to be done, raising the rates, they want to imboden, traders to get back into the market.

12:22
So I think there’s a good chance with all the Doom and Gloom ahead of the the fomc statement that’s coming out by on Wednesday. I think there’s a good chance that we actually rally as a result. And I think that could possibly take us into your end and then, of course, maybe it’s a dead cat bounce and we start to read the downtrend again after that, but we’ll see.

12:41
I mean, it’s hard. I mean, it’s hard to predict the next day of trading much less what’s next month or next year is going to be. But nonetheless, A lot of this is up to you, you have to know where you’re going to get out at in the market and you can’t just wait for the market to turn back to decide that you have to decide well in advance, okay?

12:59
If the market was to start going back down today, where would I get out at? And that should always be adjusted based on the current market conditions. So if the market rallies up another 10%, then your Line in the Sand, should change as well. So I’ll give you this last one here.

13:14
This is the monthly chart of the S&P 500. This is 2009’s lows look what’s happening right now. We’ve had a pretty good trend line going on here and now it’s being broken today so we’re we close at the end of the month is going to be key.

13:32
Can we close back above this trend line? Who knows. But we have still some time to work with, so Get to work. Figure out what you’re tolerant of, what you can handle. Draw that Line in the Sand and know where you’re going to, get out.

13:47
If things get really bad. All right. You’ll have any questions. Feel free to email me and ryan@shareplanner.com. Thanks and God bless. Thanks for listening to this week’s podcast of Swing trading with Ryan Mallory. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the financial markets every day with Traders from around the world with your membership, you’ll get a seven day.

14:11
A trial access to my trading room and text and email alerts. So go ahead and sign up by going to shareplanner.com, backslash Trading Block, that’s www.shareplanner.com/trading-block.

14:27
And follow me at SharePlanner on Twitter and on SharePlanner’s, Facebook page, where I provide unique market, and trading ideas every day. If you have any questions, please feel free to email me ryan@shareplanner.com or call the office at 321-522-6733 all the best to you and God bless.