Today's action is a harbinger for a quick 6% decline followed by another aftershock of 15%. This will complete a 25% decline, which is the first phase of the 2016/17 bear market. I think its important to talk about where the market will hold in upcoming declines and where it will bounce only to be sold again. Observing trading tonight (here in Vancouver) before China opens, global markets are staring blankly over the ledge. I fully expect to walk in over the next few days and find markets coming undone.
Our proprietary model sees (using SPDR SP500 SPY) trading down from the current close of 188.83, and we project it will fall first to 177.68 then 160.08. All this means is that the model is down 6%, then another 14% from here, while completing a 25% move from the recovery highs in November after bouncing back from the jolt of the August "Flash Crash." Few expected that rally, and it was a complete Yellen head fake. Markets need this healthy decline to survive, but make no mistake we are in for a 2 year decline in equities, and the continuation of the move started today.
Check back once we reach these levels..
Remember safety is no accident.