When I decided to venture into the financial industry, I created a must-read list of investing books.
At the top was “Reminiscences of a Stock Operator” by Edwin Lefevre, a classic every financial professional is familiar with.
Ever since I read it, I’ve wanted to be like the main character, Larry Livingston (based on the real life trader Jesse Livermore).
What impressed me most was his ability to read charts and to interpret them to predict market direction.
This made sense to me.
I developed the same obsession and have spent months studying the ins and outs of technical analysis of market movements.
As a trader, this knowledge has served me well. I’ve used technical analysis to my advantage many times trading forex, cryptocurrencies, and stocks.
However, I also learned quickly that this kind of analysis isn’t 100% correct.
For it to work, the fundamental market picture must point in the same direction.
Which brings me to my point.
Right now, both technical and fundamental analysis are forecasting a downturn.
Let me show you why…
Beware Of This Market Pattern
Many technical indicators can help you spot the end of a bull market—double top, head & shoulders, reverse cup & handle, etc.
However, one of the most dangerous indicators is what’s known as the megaphone pattern, also called the broadening top or the expanding wedge.
This pattern has just formed on the S&P 500.
As is typical for this pattern, price is trading in a broad range with volatility increasing.
When price touches the border lines five times, the result is a massive swing downward.
That’s because high-volatility is a direct indicator of growing anxiety in the market. When investors feel uneasy about their positions, they panic, resulting in a price crash.
Macroeconomic Conditions Are Deteriorating
Again, though, as I’ve mentioned already, technical analysis is only part of the story.
You must look at the fundamental picture as well.
Today, it is equally gloomy.
The trade war continues to escalate and is showing no sign of resolving.
That is unless you still believe the official narrative coming from the White House suggesting that the Chinese will soon crawl to Washington begging for a trade deal.
The global economy is slowing significantly.
Two major economies—Italy and Argentina—are already in recession. Seven others—Germany, the UK, Mexico, Brazil, Singapore, South Korea, and Russia—are expected to enter recession this quarter.
Meantime, the Fed is deeply divided on what future policy should be. I doubt they will give the market the fix it needs in the form of a 50-basis point rate cut.
When you combine these factors with the technical picture, it becomes clear that the only direction this market can move is down.
However, there is a way to play this market and profit.
I will reveal that play in tomorrow’s brand-new edition of True Retirement Wealth.
Get yours before it’s too late.