Stock Market Update | How Much Lower Will Markets Go?

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On Monday I posted on my facebook page that if the S&Ps (ES) closed below 1200 we were going to see much further downward movement on the stock markets.  The ES closed almost 10 points below the 1200 level on Monday, and since then the markets have slided much lower (currently at the 1152 region).

Currently the S&Ps are at support at 1151 – the 61.8% fibonacci retracement of the October rally.  Usually the 61.8% fib level is a an area where markets pause and fail to make further advance (or decline).  However, as you will see in the video (below), the Nasdaq (NQ) has already breached its 61.8% fib level and has declined lower.  This looks bearish for the Nasdaq, and the question is will the S&Ps do the same.

If the ES does find support at 1151 and rallies from this level it will face resistance and potential failure at 1200.  The 1200 level is not only a psychological resistance level (a round number) but is also the confluence of two moving averages: the 21 EMA and 50 SMA.

If we break below the 61.8% fibonacci level at 1151 then we are heading lower to the next fib level at 78.6% at 1114 (I like to use the 78.6% instead of the 76.4% and it is also a favourite of Carolyn Boroden’s, a leading expert on fibonacci).

Given the fact that  we still have a full on squeeze and that slow momentum is turning negative, in the backdrop of greater uncertainties in Europe, I believe we will see further decline in the stock markets.  This is despite any temporary rallies to resistance levels.

For trading intraday this could provide potential opportunities,  but for swing trading this is more of a stand back and wait scenario.


  1. Sorry, but you are full of crap Alessio! You’re the best day trading contrarian indicator I have seen in years.

  2. Hi Tonto – I am sorry you feel that way but with respect, I am not sure you know what you’re talking about. Markets are constantly changing, and there is only so much that analysis can do. There are a lot of surprises that happen (as for example on Monday) that most traders are unprepared for and we have to react to those changes. I don’t claim to hold a crystal bowl and admittedly sometimes we get it right, and sometimes we get it wrong. I am focused on following my setups and strategies – and listening to the markets if they change their mind. Thanks.

  3. craig james forsyth

    alessio, you stated on bbc, which i thought was great, as to awakening people up to financial armagedon, which i think is coming, but maybe differ slightly, as i think is being manufactured, so they can, eventually bring in, a one world currency, but could you explain when you said millions of peoples savings will vanish, do you mean, from the stock market or do you mean from their bank accounts, if the banks collapse, is my savings, toast, as you say, could you explain, ps i also invest in oil stocks, with proven reserves, as with demand, re asia, china will be high, also gold, pretty safe, also maybe the american dollar might collapse, thanks craig

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