Full Crash Forecast if SPX Break is Made.
This is a forecast of what it would look like if SPX went into a full bear break now which was compliant with the norms of historic crashes.
It’s a sequential trade plan. Which means as one swing hits it supports betting on the next swing in the pattern. If swings do not hit - it was wrong is no longer useful.
Full Crash Forecast:
Subscribers, go to this version. It has everything in the current post in it but it also explains how the analysis is done and offers trading notes for each section of the move if it develops.
Market Forecasts and Trade Plans is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
A Full Crash Roadmap With Trading Notes. - by HoleyProfit (substack.com)
Swing 1: The first Break (Bearish)
A move down to 3950. This being an intermediate low and there being a whipsaw move starting in this area. Off a level just under 3950, we see some sort of tricky candle with wicks on both ends. .
Swing 2: Whipsaws (Bullish into bearish)
Swing 2 is a chop swing. The wicky candle spoken of above. Low is around 3940 and high is around 4140. Price is liable to whipsaw very hard in this zone.
Swing 3: The Fear Stage (Bearish)
At this point, the market goes into a crash relative to local timeframes. This crash takes us to retest the lows of 2022. Swing high 4140 areas and swing low 3550 area.
Swing 4: Two Legged Bull Trap (Bullish)
From here, another rally is setting up but this will be whippier. Approximate first bounce to 3770. Sharp drop for double bottom. Big bull trap rally to 3950.
Swing 5: The Next Bear Break (Bearish)
Downtrend resumes but has a few tricks to play. We drop from 3950 to a new low but quickly rally back to 3750 area. Probably a really strong local chart rally after the false bear break.
Swing 6: Prime Short Setup (Bearish)
Local chart crash event from 3750 areas to 3410 areas. Probably a really easy leg to be short in but few will want to be after the false bear break and vicious counter rally.
Swing 7: Fast Retest of Break (Bullish)
Another vicious bull trap. Main swing heads back to 3580. Possible a false start on the short here and a head fake above to 3650 areas. Really good short op into the head fake.
Swing 8: Near Term Capitulation (Bearish)
A crash of a bit over 10%. Maybe close to 15%. High around 3650 and a low somewhere close to 3150.
Swing 9: Big Stop Hunt / Bull Trap (Bullish)
Another bull trap. Probably made up of one really strong move and then a head-fake high. Low around 3150 and high around 3500.
Swing 10: Pre-Crash Break (Bearish)
A bear swing that makes a double false breakout at the low. Turns into a sharp bull trap. High around 3500. First low around 2970 and second low around 2900. Bull trap from 2900 likely very aggressive.
Swing 11: Last Big Bull Trap (Bullish)
A bull trap and one that is a total layup for a great short. The bull trap should have a lot of momentum and head to around 3420. Some sort of mini spike out at the top and the best short of the whole move is setting up.
Swing 12: Headline Making Crash (Bearish)
The Event. Without making any guesses as to what the event may be, at this point to trigger the downswing there will probably be a fundie trigger. The fundie supported crash starts here. 3420 to 2420.
Swing 13: Start of End of Drop Chop (Bullish)
The crash is close to over. Swing 13 will be a false hope rally and the next bear break will terrify people but the crash is close to over now. One more big bull trap. Low around 2420 and high around 2870.
Swing 14: Penultimate Bear Move (Bearish)
The first of two terminal swings of the bear market. Swings 14, 15 and 16 make up an AB=CD type pattern with it being one crash to a new low, a little rally and then the bleed out into the real low. Swing 14 high 2870 and low 2330.
Swing 15: Final Failed Rally (Bullish)
Last bull trap. After this, buying the dip is expected to beat selling the rip but by this time dip buying is a thing for museums. Low 2330 and high 2800.
Swing 16: The Bear Market Low (Bearish)
The kick out. A news supported move into yet another low. Despair takes hold at this point and it's the time when people who swear they'd never sell their assets now will be forced into doing so at the low. High 2800 and low around 2000 with maybe a head fake under there.
Swing 17+: The Turn to Uptrend (Bullish)
And now the crash is over. There will still be at least one more crash-like move but a new low will fail and we'll be in an uptrend. Although the crash would now be over, it would be a very (Very) long time before the recovery was made. The insta-recovery people have become accustomed to would not be applicable in this type of crash.
It’s a sequential trade plan. Which means as one swing hits it supports betting on the next swing in the pattern. If swings do not hit - it was wrong is no longer useful.
Full Crash Forecast:
Subscribers, go to this version. It has everything in the current post in it but it also explains how the analysis is done and offers trading notes for each section of the move if it develops.
Market Forecasts and Trade Plans is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
A Full Crash Roadmap With Trading Notes. - by HoleyProfit (substack.com)
Swing 1: The first Break (Bearish)
A move down to 3950. This being an intermediate low and there being a whipsaw move starting in this area. Off a level just under 3950, we see some sort of tricky candle with wicks on both ends. .
Swing 2: Whipsaws (Bullish into bearish)
Swing 2 is a chop swing. The wicky candle spoken of above. Low is around 3940 and high is around 4140. Price is liable to whipsaw very hard in this zone.
Swing 3: The Fear Stage (Bearish)
At this point, the market goes into a crash relative to local timeframes. This crash takes us to retest the lows of 2022. Swing high 4140 areas and swing low 3550 area.
Swing 4: Two Legged Bull Trap (Bullish)
From here, another rally is setting up but this will be whippier. Approximate first bounce to 3770. Sharp drop for double bottom. Big bull trap rally to 3950.
Swing 5: The Next Bear Break (Bearish)
Downtrend resumes but has a few tricks to play. We drop from 3950 to a new low but quickly rally back to 3750 area. Probably a really strong local chart rally after the false bear break.
Swing 6: Prime Short Setup (Bearish)
Local chart crash event from 3750 areas to 3410 areas. Probably a really easy leg to be short in but few will want to be after the false bear break and vicious counter rally.
Swing 7: Fast Retest of Break (Bullish)
Another vicious bull trap. Main swing heads back to 3580. Possible a false start on the short here and a head fake above to 3650 areas. Really good short op into the head fake.
Swing 8: Near Term Capitulation (Bearish)
A crash of a bit over 10%. Maybe close to 15%. High around 3650 and a low somewhere close to 3150.
Swing 9: Big Stop Hunt / Bull Trap (Bullish)
Another bull trap. Probably made up of one really strong move and then a head-fake high. Low around 3150 and high around 3500.
Swing 10: Pre-Crash Break (Bearish)
A bear swing that makes a double false breakout at the low. Turns into a sharp bull trap. High around 3500. First low around 2970 and second low around 2900. Bull trap from 2900 likely very aggressive.
Swing 11: Last Big Bull Trap (Bullish)
A bull trap and one that is a total layup for a great short. The bull trap should have a lot of momentum and head to around 3420. Some sort of mini spike out at the top and the best short of the whole move is setting up.
Swing 12: Headline Making Crash (Bearish)
The Event. Without making any guesses as to what the event may be, at this point to trigger the downswing there will probably be a fundie trigger. The fundie supported crash starts here. 3420 to 2420.
Swing 13: Start of End of Drop Chop (Bullish)
The crash is close to over. Swing 13 will be a false hope rally and the next bear break will terrify people but the crash is close to over now. One more big bull trap. Low around 2420 and high around 2870.
Swing 14: Penultimate Bear Move (Bearish)
The first of two terminal swings of the bear market. Swings 14, 15 and 16 make up an AB=CD type pattern with it being one crash to a new low, a little rally and then the bleed out into the real low. Swing 14 high 2870 and low 2330.
Swing 15: Final Failed Rally (Bullish)
Last bull trap. After this, buying the dip is expected to beat selling the rip but by this time dip buying is a thing for museums. Low 2330 and high 2800.
Swing 16: The Bear Market Low (Bearish)
The kick out. A news supported move into yet another low. Despair takes hold at this point and it's the time when people who swear they'd never sell their assets now will be forced into doing so at the low. High 2800 and low around 2000 with maybe a head fake under there.
Swing 17+: The Turn to Uptrend (Bullish)
And now the crash is over. There will still be at least one more crash-like move but a new low will fail and we'll be in an uptrend. Although the crash would now be over, it would be a very (Very) long time before the recovery was made. The insta-recovery people have become accustomed to would not be applicable in this type of crash.
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