Something to read before market open, or not
Sent: Wednesday, February 26, 2020 2:33 PM
To: Z
Subject: Historic Day in the Markets: McHugh's Tuesday Newsletter, February 25th
Dear Subscribers,
The latest Daily U.S. Market Forecast Report, issue no. 3812 as of Tuesday, February 25th, 2020, is now available at www.technicalindicatorindex.com To access this report, subscribers can simply log in and click on the U.S. Daily button.
For those of you with busy schedules, here is an executive summary (for a more intense detailed report, with charts, more statistics, trend analysis, and extraordinary developments, click on the U.S. Weekend and Daily Market Forecast Reports at the website):
Today's Market Comments:
Where do even I begin tonight? Historic is one word to describe what is happening. The Industrials just had the worst 2-day point decline in the history of the stock market. U.S. Bonds just rose to their highest price ever. The 10 Year U.S. Treasury rate just dropped to its lowest interest rate ever. All this happened Tuesday, February 25th, 2020. Why? What does all this mean?
Well, this is exactly the sort of action one would expect at the start of Grand Supercylce degree wave {IV} down. What are the odds all of the above would happen on the same day? This is all occurring with two concurrent Hindenburg Omen stock market crash warning signals on the clock. No crash yet in percentage terms, but it still is early. Stocks have not bottomed. The Daily Full stochastics are not oversold yet, the Slow stochastic not even close to oversold. See chart on page 31 for that view. Volume was higher on Tuesday's plunge than on Monday's plunge.
The Industrials have now wiped out all their gains since October 31st, 2019 to their all-time high last week, in just four days. Four days. The Industrials have blown past both their 50 day and 200 day moving average support levels like a hot knife through butter. Support is hard to find right now. Every trend channel's bottom boundary from several degrees of trend have been breached with this plunge.
The S&P 500 has dropped 209 points since our Purchasing Power Indicator triggered a new Sell signal February 21st. The S&P 500 and NASDAQ 100 are now showing losses year to date 2020. The PPT has been buying the stock market with both hands and feet the past two days, just to keep the plunge from a catastrophic collapse. Somebody's balance sheet is bloated with stocks nobody wants to hold right now, either the Fed, or a surrogate Wall Street firm working with the PPT. The differential between the decline in demand power and the rise in supply pressure is completely out of balance. Normal market forces are not in equilibrium at this time. Market makers are on overload.
Patterns that track Bull markets from the 1700s, 1986, 2009, 2017 and October 2019 have been screaming that a major decline was approaching. It is here. The fundamentals are awful. Global trade is being disrupted to a degree one would expect from war. This could domino into a host of great problems beyond the Coronavirus. Before all this, 42 percent of all listed companies were showing losses. This is how serious recessions begin. The Fed can print QE money, but can they come up with an a cure for a contagion pandemic virus?
If we want to find a bottom for the various degrees of trend Bull markets concluding now, the myriad Megaphone top patterns for these trends we have been showing for months gives downside price targets where the declining bottom boundary lines extend out to. In the present situation, we are talking about bottoms far below where prices sit tonight. Not right away necessarily, but downward trends of lower highs and lower lows should work their way toward those levels.
Tuesday's action moved our 10 day average Advance/Decline Line Indicators to Sells, and most of our short-term indicators are now on Sells. Next to watch will be our Secondary Trend Indicator, which is one bad day from generating a sell.
In charts on pages 31 to 33, it looks like the Industrials are inside a small degree wave iii-down move, and once it finds a resting spot, a small wave iv bounce will arrive, to be followed by a wave v-down move to conclude the first down wave-1 of this infant Bear market. Wave 2-up will likely attempt to rise enough to fill the open gap from the start of Monday, February 24th's plunge, however there may not be enough buying power to accomplish that. Then an even worse decline will follow than what we are experiencing now, wave 3-down.
Gold fell Tuesday, as it concluded the first subwave {i} up for {5} up of 5-up. Because precious metals usually see their wave fives the most dramatic, right now the wave {5}-up progress is far shorter than wave {3}-up was, so more upside is in the future for Gold once this wave {ii} down correction completes. See chart on page 45.
Our Blue Chip key trend-finder indicators generated a Sell signal February 24th, 2020 and remain there Tuesday, February 25th, 2020. The Purchasing Power Indicator component triggered a Sell signal Friday, February 21st. The 14-day Stochastic Indicator generated a Sell on February 18th, 2020, and the 30 Day Stochastic Indicator generated a Sell on February 24th, 2020. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Our intermediate term Secondary Trend Indicator generated a Buy signal Friday, December 6th, and remains there Tuesday, February 25th, down 8 points (out of a possible 9 points), to positive + 3. It will need to drop below negative - 5 for a new Sell signal.
Demand Power fell 10 to 380 Tuesday while Supply Pressure rose 27 to 450 telling us Tuesday's Blue Chip decline was powerful, had crash potential, however deep pockets Plunge Protection Team intervention supported prices. This DP/SP Indicator moved to an Enter Short Signal February 24th, and remains there Tuesday, February 25th, 2020.
The HUI generated a key trend-finder indicator Buy signal February 18th, as the HUI 30 Day Stochastic triggered a Buy signal February 18th, 2020, and our HUI Purchasing Power Indicator generated a Buy on February 18th, 2020. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Enter Buy signal February 19th. On Tuesday, February 25th, Demand Power fell 5 to 435 while Supply Pressure rose 10 to 425, telling us Tuesday's HUI decline was strong.
DJIA PPI Fell 39 to positive + 33.02, on a Sell
DJIA 30 Day Stochastic Fast 3.33 Slow 32.67 On a Sell
DJIA 14 Day Stochastic Fast 0.00 Slow 30.00 On a Sell
DJIA % Above 30 Day Average 3.33
DJIA % Above 10 Day Average 0.00
DJIA % Above 5 Day Average 0.00
Secondary Trend Indicator Fell 8 to Positive + 3, On a Buy
Demand Power Fell 10 to 380, Supply Pressure Up 27 to 450 Sell
McClellan Oscillator Fell to negative - 285.66
McClellan Osc Summation Index + 2435.69
Plunge Protection Team Indicator + 15.98, an "OFF" signal
DJIA 10 Day Advance/Decline Indicator - 386.4 on a Sell
NYSE New Highs 52 New Lows 367
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated a Sell signal Friday, February 21st, 2020, and remain there February 25th, 2020. The NDX Purchasing Power Indicator generated a Sell on February 21st, 2020, the NDX 14 Day Stochastic triggered a Sell signal on February 21st, 2020 and the 30 Day Stochastic triggered a Sell signal on February 21st, 2020. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to an Enter Short positions signal Monday, February 24th and remains there February 25th. On Tuesday, February 25th, Demand Power Fell 8 to 420, while Supply Pressure Rose 17 to 465, telling us Tuesday's decline was powerful with deep pockets intervention buying the market to stop a crash.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal February 25th, 2020, and needs to fall below negative - 5.0 for a new Sell. It fell to negative -16.6 on Tuesday, February 25th.
NDX PPI Fell 26 to 203.62, On a Sell
NDX 30 Day Stochastic Fast 12.20 Slow 46.34 On a Sell
NDX 14 Day Stochastic Fast 4.76 Slow 40.24 On a Sell
NDX 10 Day Advance/Decline Line Indicator - 16.6 On a Sell
NDX Demand Power Fell 8 to 420, Supply Pressure Up 17 to 465 Sell
RUT PPI Fell 20 to + 134.83, on a Sell
RUT 10 Day Advance/Decline Line Indicator -260.9, On a Sell
Today's Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Buy signal February 18th, 2020.
HUI PPI Fell 5 to + 235.15 on a Buy .
HUI 30 Day Stochastic Fast 65.00, Slow 56.11 on a Buy
HUI Demand Power Fell 5 to 435; Supply Pressure Up 10 to 425 Buy
McHugh's Market Forecasting and Trading Report and this Executive Summary from that report is an educational service providing a body of technical analysis that measures the possibility and probability of future changes in mass psychology (swings from pessimism to optimism and back) which identifies possible new trends in major markets within various time frames, from very short term (daily) through very long term (years and decades). The tools we use are based upon price patterns, indicators and other proprietary measures that we have identified as correlative to future market trends. While an investor or trader could come up with ideas and strategies from the information published in our reports, at no time should a reader or viewer be justified in inferring that any such advice is intended by this publication or our other services. We are not offering investing advice, but are only offering some (but not all) of the information that can be used in the investment decision making process with your own personal financial adviser. Investing carries risk of losses. Information provided by Robert D. McHugh's Market Forecasting and Trading Report is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your adviser to explain all risks to you before making any trading and investing decisions. Information contained herein is believed to be reliable, but the publisher cannot be held liable for errors or omissions. No specific advice can be construed from the following. The reader is solely responsible for all actions taken. Please refer also to our disclaimer in the back of the newsletter from which this Executive Summary is derived. Copyright c 2020 Robert McHugh
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