Key Technical Indicators Confirm Big Drop in Markets Coming Soon

201602_20_year_graph

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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)

James Bailey

Author: James Bailey

James Bailey is an author, business owner, husband and father of two children. His vision is to broadcast the good news of Jesus Christ through blog sites and other media outlets.

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GC
GC
Member
March 14, 2016 11:28 PM

Hi James, what can you say about this prophecy?
http://www.elijahlist.com/mobile/display_word.html?ID=15079

Bob B.
Bob B.
Member
March 3, 2016 10:34 PM

Thanks Jame for your reply, patient explanations, and for your sincerity.

When looking at the decay in FAZ it would drop 10-40% per year (depending on volatility) even if the Russell 1000 Index Financial Services index started and closed a year at the same level. So if the Russell 1000 Index Financial Services doesn’t decrease at a good clip, it’s a money loosing investment. If we get to 17900, FAZ will be in the low 30s due to the decay which is lower than what any of us have purchased it at. So it’s very risky and then there’s days like today where the Russell 1000 Index Financial Services increased 0.62% and FAZ decreased 2.00%, 0.14% more than 3X, very unfavorable. In other words, if the steep crash happens in late 2016 and FAZ has decayed to 20 by then, it may jump straight up 2-3 times and be only at 40 or 60. I hope this isn’t the scenario that happens but if the Russell 1000 Index Financial Services takes its own sweet time in only going down slowly then FAZ will lose money over time.

I do hope the Russell 1000 Index Financial Services index goes down fast and soon so people on this board make money/recoup their investment despite the decay rate in FAZ, but I want to be sober about the risks too.

Julz
Julz
Member
March 3, 2016 9:25 PM

My preference is to look through to what’s driving the rally rather than the technicals which I have little belief in personally. In the current environment technicals are even more unhelpful because the whole market has simply become a game of trying to front run the central banks. If the Fed was to cut rates or launch QE4 stocks would rally regardless of technicals, likewise if they were to hike rates markets would fall no matter how bullish the charts looked. The current rally has largely been fuelled by expectations that the Fed will no longer hike rates and that the ECB will do what ever it takes.

Another way of looking at all this is that stocks are not actually rising at all, instead the USD is simply falling (along with many other fiat currencies) which just pushes stock values up in USD terms. The Fed moving to more of an easing bias and the inevitable weakening of USD that follows was always a risk to being short stocks. This is why I recommended in posts at the start of the year that folks should consider hedging this risk by going long gold. Short stocks (or long FAZ) combined with long gold or even long silver is still tracking very well, stocks have actually continued to fall in Gold and Silver terms.

Bob B.
Bob B.
Member
March 3, 2016 5:02 PM

in “U.S. Dollar Takes Strong Stand with Fed Rate Hike” post on Dec. 15 it states
“The Lord also showed me a sign to watch for to let us know we are very close to the sudden crash. The sign will be President Obama authorizing a proposal for $1.2 billion in military aid. I shared the details about this sign in my previous post, The Event Before the Event.
This event will mark a turning point in the markets as they will turn down at that time and continue moving down until the big drop.”

When the Lord told you the $1.2 Billion marked a turn in the markets, do you think the meaning was an upturn (not downturn) in the markets and you misunderstood? The banks have been performing better than the general market since the $1.2 Billion and have been crushing FAZ.

Did the Lord out loud, or in a quiet inner knowing show you the $1.2 Billion marked a downward point in the markets?

David
David
Member
March 3, 2016 4:16 PM

The Lord gave me this scripture today:
Isaiah 40:31 King James Version (KJV)
31 But they that wait upon the Lord shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary; and they shall walk, and not faint.
Praise the the name of Jesus.

I also saw a rocket shooting straight up today and immediately thought of FAZ.
.

Glenn
Glenn
Member
March 2, 2016 3:16 PM

The West Coast CO emissions may not be real, please read the March 1 update at he top of this article.

http://www.dailykos.com/story/2016/2/29/1493107/–There-is-a-Major-Carbon-Monoxide-Explosion-on-the-West-Coast

Rob
Rob
Member
March 2, 2016 12:07 PM

DJI has gone from 16000 to almost 17000 in 2 weeks. I can see it continuing in the current trend up to almost 18000 before the middle of march. That would complete the W and also fulfil my earlier dream that “the market is making a new high but its going to fall again”.

I suspect that where I error’d last week was that the dream I had was very vague when I awoke, it wasn’t that clear. But I still don’t really know.

Last night my dream was also vague, I woke up but fell asleep again straight away and in the morning it was gone. However, what came after the first dream remains, but I’m not trusting this as much. I had dreamt something about DJI going up and then down again but I don’t remember it now. Then I had an image of the DJI gapping down 300 points on open and it was still falling. I had a buy position as it was going up first, and I was upset and didn’t know what to do.

Rob Perrett
Admin
March 3, 2016 2:03 AM

Actually ‘a new high’ is incorrect. From my journal on the 24th Dec 2015 – “Some kind of flash that the market had gone higher but it was going to go down again. I think I saw xx900.”

Dec 31st –
“I checked the DJI in my dream. I saw that it was on its way down, but had spiked up to 17900 and triggered my sell order. So I was already in profit. It was a big spike, almost 100pips. It went past it just a bit and then down again. I was quite pleased. I went to check my email for the sell order confirmation and saw it there also confirming my position. I think also that in the dream I was thinking I should have had a bigger position because it only spiked before going down and it was the very top. The graph I saw was blue.

You can imagine how confused I was when it never reached 17900 at the beginning of January.

Phlip - Sydney
Phlip - Sydney
Member
March 2, 2016 6:37 PM

Thanks Rob for the update

PM
PM
Member
March 2, 2016 1:17 AM

The technical indicators don’t seem help us, as they seem to indicate one thing and the market does another. Many days it can be blamed on market intervention, but today’s rally happened during normal trading hours. I am certain the crash is coming this year for reasons beyond this site, but the short term is proving exceedingly painful.

My goodness, as of today I am now stuck in an awful situation. If the market keeps up this strong uptrend I am royally hooped. I’m sure others here are probably stuck in the same pickle. I could live on a small downturn, but the last two weeks the amount that FAZ dropped is heartbreaking. I did not want to let go of my position with a slight profit last month, now I will be forced to let go of a portion at a loss. How quickly the cushion disappeared.

David
David
Member
March 2, 2016 3:28 AM

PM, don’t sell at a loss, wait it out for the big drop, FAZ will go way up in price. If you sell at a loss now, you will be even more upset when you see it go way up in price when the big drop comes. I could have sold FAZ many times at a profit, I have owned it since last June, and have added more thru out the year. I have found thru out my life, when it comes to the things of God, you must be patient, and that without faith, you can not please God.

PM
PM
Member
March 3, 2016 2:52 AM

I have exercised much patience with FAZ the latter part of this month. I guess I should say that I have been lurking on the forum for quite a while, but never really commented on any posts until very recently. I had a bit of FAZ for about half a year. Cost me dearly (couldn’t trade, let other things go). I did pile on much more recently. Made a huge mistake of holding on too tightly a too large position. This calendar year my cushion was very comfortable, with the heart stopping market rally now I am all out.

By all human rational thought I should have sold out on Feb 16. FAZ is technically doing very poorly now. It does give those on the edge a change to get in at a better price – especially if they have been reluctant to enter at the much higher prices, but regrettably others may be forced out. Myself included.

See this annotated chart for the past two months:

TomP
TomP
Member
March 3, 2016 2:21 PM

PM-
Sorry that you felt forced to have to make a decision and tap out of FAZ. My prayer is that you’ll get comfortable and be able to get back in again soon. This has definitely been an interesting ride the past 10 days or so, as those that jumped in about that time are experiencing an 11-ish% decrease in PPS. I also agree with you that this is providing an opportunity for an attractive entry point for some fence-sitters or those contemplating adding more. Overall…..clearly need to be holding in on faith right now.

Be Blessed!

Jon
Member
March 3, 2016 3:12 PM

PM,
I know waiting on FAZ to skyrocket is an endurance test, but as my first pastor said decades ago, “God is not a leapfrog”. We’ve got to stay with what he first showed James in regards to FAZ skyrocketing. When my wife and I first put a certain number into FAZ, immediately God confirmed it with a money gain of that number. My wife’s eyes got big! Next my wife drove to her mother’s house and a car tag had that same number. She said, “Wow, what is going on?!” By the way, this is a large number that matched three times! We even had two other confirmations from the Lord that he is going the use FAZ for His Kingdom. Thought I would offer some encouragement. I need it at times too.

Phanuel
Phanuel
Member
March 3, 2016 10:55 AM

PM, this is what I wrote on February 12th (which was also written before that date)….”So I listened to Bill Holter on Trunews and he confirmed what The Lord has been revealing. He believes the big crash is about 2-3 months from now. And he believes we are currently in the crash. By the mercies of God it was revealed in a dream I had on Jan 17, 2016 that the crash season began on Jan 17, 2016. It has also been revealed by the Grace of God that a big crash of over 1300 points will happen in one day. It has also been revealed that the danger zone is May/June. It has also been revealed there will be difficulty withdrawing money from the banks in June, and a bank Holiday”
“I also wrote a few times that the general trend is downward with rallies. And I commented (this was my opinion).. THAT WE SHOULD NOT BE “SURPRISED” OR CAUGHT OFF GUARD IF THEY TRY ONE MORE RALLY TO 17,000. WE SHOULD ENDURE TO THE END. God bless!”

Have faith in God!

Domz
Domz
Member
March 3, 2016 3:12 AM

I rebuke the spirit of fear and doubt from you in the Mighty Name of Jesus! And call forth God’s ministering spirits of finance & provision to be released over you!

Now he who supplies seed to the sower and bread for food will also supply and increase your store of seed and will enlarge the harvest of your righteousness. -2 Corinthians 9:10

Julz
Julz
Member
March 2, 2016 2:47 AM

Yeah this rally has been tough, the tricky part is finding the right sizing. Too large and you get forced out when when markets move against you and too small and you feel like you missed out when the move finally arrives.

I’ve come round to the thinking that if we are right regarding these moves in currency and stocks then are still plenty of opportunities to come. As a result we don’t need to knock the lights out with the first move, so smaller sizing that allows us to top up and average in when these sorts of moves occur makes sense. I think there is more faith believing that the Lord will present many opportunities in the future than going all in on one single move. Assuming the W goes all way the back to something approaching 18,000 in the Dow and sizing accordingly is probably a useful benchmark.

Kevin
Kevin
Member
March 3, 2016 1:28 AM

Sounds like wisdom to me Julz.

Mav
Mav
Member
March 2, 2016 2:30 AM

PM, as one knows FAZ is a hold and forget about it trade that is juiced at 3 times the moves of the banking stocks. Yes, today was not a good day and was painful )-: ouch

Dee V.C
Dee V.C
Member
March 1, 2016 9:03 PM

Thank you, brother Matt for allowing the HolySpirit to use you. We must all draw ever-increasingly closer to the Lord Jesus Christ (yielding to His guidance, help, correction, instruction, strength, power & love ).

Matt Smith
Matt Smith
Member
March 1, 2016 5:25 PM

To answer your question, Geoff the market will take a major hit in the spring season, which is Mar-June. So anytime from Mar to June the markets will take a big hit. Then by the fall-winter season it will be over. The Lord let me know the hit will be a blow, and many people will understand it’s only going to get worse, thus marking this nations fate for “Economic death in the Fall-Winter season,” hence the term “Another crushing blow sealing this nations fate.” Think of it as a boxer, we will get a financial Haymaker anywhere from Mar-June, putting us on the ropes, and the Fall-Winter season will be the knock out punch. I expect a decent market size drop from Mar-June. I also expect some false flag attack, or natural disaster from Mar-June, to coincide with this drop. I hope this answers your question.

Geoff Krieger
Geoff Krieger
Member
March 1, 2016 9:03 PM

Thanks for clarifying that clarifying that, Matt. The time sure is short, isn’t it? It’s like we’ve been on a prophetic roller coaster with new turns and loops that just keep coming, but experiencing the big drop will really be something.

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