Based on where the stock market closed yesterday, technical indicators are confirming a big drop is likely to happen soon.
The chart above shows a 20-year history of the S&P Index including the tech bubble crash in 2000-2001 and the 2008 financial crisis. Analysts watch technical measures from previous crashes to see when we are in danger of another crash. Based on where we closed Monday, four key indicators are now confirmed to be in the danger zone. (Source: Stocktwits.com)
These indicators include:
- Relative Strength Index (RSI) dropped to 49.4. This number should stay above 50 in a strong market. The RSI is one of the most frequently used and well known momentum indicators in technical analysis. It signals overbought and oversold conditions.
- Stochastic Index dropped below 20,000. This number measures the strength of the market trend. The lower the number the weaker the trend, so we are now seeing a significant weakening of the long-term upward trend, which has been in place for the past six plus years.
- Monthly Close Under Trendline Support – We just closed the month of February below the long-term trend line support level. Analysts consider it significant whenever the trend line is broken, but even more significant to close the month below the line.
- 10-day Moving Average MA(10) just dropped below the 20-day Moving Average MA(20). This measure is considered by analysts to be one of the most reliable indicators of a downward movement in the markets.
With all four of these indicators now confirmed, the Stocktwits.com analyst concluded, barring a historic recovery, we can expect to see a much larger drop prior to seeing a new high.
These measurements capture long-term trends, so this does not mean the market is going to nosedive tomorrow or the next day, but all indications are confirming a big drop is coming.
Confirmation From Tom Demark:
The indicators listed above confirm the conclusions of analyst Tom Demark, which I shared last week in my post, Prophecy Fulfilled as Financial Shift Pushes Markets Over Cliff. Demark identified the S&P Index closed on Tuesday February 23 below the level it needed to avoid a significant downturn. Even though the S&P bounced back the next two days, Demark was still holding his ground on Friday, forecasting an 8 to 11% drop. (Source: MarketWatch)
In an interview on February 24, he said he expects the downturn to happen in the next two to three weeks, which would be by March 16. He said if it did not happen by then he would have to reassess his forecast.
Ali Winters shared a prophetic warning of a power shift in financial markets on February 23, leading to calamity. Ali had no way of knowing back in January, except God revealed it to her, but it turned out she was right because that was the day we crossed the line.
The drop in the S&P last Friday and again today, keeps us on track to fulfill Demark’s forecast and Ali Winters’ warning.
“Surely the Lord God does nothing unless He reveals His secret counsel to His servants the prophets.” (Amos 3:7)
Author: James Bailey
James Bailey is a blogger, business owner, husband and father of two grown children. In 1982, he surrendered his life to the Lord Jesus Christ. In 2012, he founded Z3news.com to broadcast the message of salvation by reporting end time news before it happens.
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