The “Technical Evidence” For A Bigger Correction

The number of markets that are currently trading at technical targets/resistance is staggering. Usually these targets act as resistance and suggest a bigger correction. I expect stocks to sell off and a little more volatility in the coming weeks.

$Nikkei was one of the first markets to show a reaction after bumping up against resistance.

Next up is the German $DAX, which crumbles rather slowly but has already given back over 400 points from its all-time high. Price action in the $DAX looks very healthy though. Looking with my bullish lense, there is a chance that the $DAX is simply retesting the breakout point from the large channel (solid blue lines).

Moving on to our US American friends. US stocks have gone almost vertical for such a long time that most traders forgot corrections and sell-offs even exist or are too young to have experienced one. $DJIA has been one of the strongest markets and has overshot a couple of major technical levels before this trendline on the weekly chart. $Nasdaq has been the stallion in the stable but it too is trading at a level at which bears commonly come out of hiding. The $S&P500 shows a perfectly clean long-term channel completion. Similarly the $Russel2000 small cap index has completed a long-term channel.

A $GDX Trade With Awesome RRR

RRR-wise, it can’t get much better than this $GDX trade! My estimate is an initial RRR of about 20:1!!! How are the odds that this plays out as planned? I don’t know, as I have never backtested wedge breaks. But it doesn’t really matter that much, be it 50% win ratio or 20% or even 10%, this bet is good! Let the wedge break to the upside and long the shiz out of it. Stops below the recent lows or below the supporting trendline.

* Please don’t take this as investment advice. I’m just presenting my opinion about the market.

DAX finally completes ascending channel

The German DAX finally touched the upside of a long-term ascending and immediately gets rejected almost 150 points. Technically this provides an opportunity for a bigger correction, but with all this central bank support of the financial markets you never know. Anyway, I am still cheering for a correction, I have not managed to participate in this rallye enough!