sgHuat Trading and Investment Web Blog: A Market Meltdown?

Reasons for standing aside for now and not buying any stocks until more bleeding has occurred:

1. Technically, NASDAQ has shown signs that it will break the dynamic support (100SMA). While the support has not been broken yet, and indeed, signs of strength are coming in (bullish pin candle on closing), the 4 hourly chart shows that any rebound (if any) is likely to be short-lived because the dominant trend now is down-trend.

NASDAQ daily chart showing that there is significant bearish momentum as well as many long bearish sell candles

NASDAQ 4 hourly chart showing how a down-trend has been initiated as the moving averages cross and serve as resistance now. It is also evident that the dominant trend is down-trend with slight pull-back upwards. Multiple candles with long bearish upper wigs are also noted.

2. Earlier thesis for holding NASDAQ was that the correction would only be limited to 10% as in previous corrections but there is increasing evidence to indicate that there is probably at least 5-10% more correction for NDX. This is due to rising bond yields and the fact that many investor's margin accounts will be called in the coming days, triggering a further cascade of stop losses. The deep incursion to low 12000s level supports the thesis that the correction is longer-lived than previously thought.

3. A look at Capital Flow of key 'leader-stocks' such as TSLA, AAPL, NIO, MSFT, indicate further bearish momentum. Indeed ARKK lost nearly 10% today, indicating serious fear in the markets. This is just the beginning and we look forward to buying into weakness in the Tech Sector.

NIO - net capital flow out, and big outflows quite significant compared to big inflows despite the cheap valuation

Tesla - net outflows and net big outflows. I use TSLA as an indicator of market sentiment. TSLA MACD and OBV does not look good. The fact that TSLA even challenged $600 is not a good sign and is indicative of further weakness to come.

Even MARA is not spared, closing at $32 (down 13%). Note the high big outflows.

Micron Tech, previously spared from correction even though Nasdaq was pulling back - the big outflows are more significant compared to big inflows. Net capital outflow is significant.

AAPL Capital Flow

4. Gold is also dropping. This is reflective of the market preferring the thesis of a higher interest rate environment moving forward. Sanctuaries of safety are shrinking. People are realising that cash is the preferred position currently.

Projection of Gold Prices on Daily Chart

5. On the 4-hourly chart, VIX, which is a measure of fear in S&P500 index, is set to break $30 as the 20MA crossed bullishly above the 50MA.

VIX daily chart showing immense emotional swings in the market

6. Despite Powell's re-assurance to keep interest rates low, there was no significant market reaction: feds-powell-to-take-questions-on-job-market-interest-rates-bond-yields-11614872817

No market reaction at about 2.30 PM GMT+5

7. SPACs like VIH and penny stocks which reflect market sentiment are reaching incredibly low levels as investors pull-out.

With BTC/USD supposed to continue its uptrend, and currently trading above 48k USD, it is surprising that VIH dipped significantly today.

8. Generally bearish market sentiment across the board as investors pull back into cash positions. Pockets of hotness are also starting to show strain, such that no stock is safe: even American banks like Goldman Sachs, JP Morgan & Bank of America. All sectors are pulling down.