Fasten your seat belts!

Warning: stock market bears aren't as cute...

The S&P 500 technical analysis looks bad. It looks like the chart is forming one of the most dangerous patterns for stock prices.

According to centralcharts.com, the statistics of "head and shoulders" patterns is quite scarry.

- In 93% of cases, the exit from the head and shoulders pattern is bearish.

- In 63% of cases, the price reaches the objective of the head and shoulders pattern when the neck line is broken.

- In 96% of cases, the bearish movement continues from the break in the neck line.

- In 45% of cases, after exiting, the price makes a pullback in resistance on the neck line of the head and shoulders pattern.

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Light at the end of the tunnel

Is the light at the end of the tunnel a sun or a train? Today the S&P 500 entered correction territory as it broke through the magic 4,300 level, or 10% down from its peak . It remained there for the most of the day before recovering in the last hour. This was different from the few previous sessions when strength during the day was replaced by a selloff before closing (bearish sign). The volatility and fear indicator, VIX, during the day came close to 39 (with normal values below 20) pointing towards panic selling and increased pressure from margin calls, before closing around 30 (still high). As Warren Buffet once said, “be fearful when others are greedy, and greedy when others are fearful.” We believe the time to start carefully buying certain names (for a long-term) has arrived. However, catching a falling knife still a risk, as the market could continue its freefall or rebound in a short-term and fall further into a bear market territory (more than 20% down from the...

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February: Is the bull in charge?

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The Reopening: Online Travel Companies

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Ready, Set... January

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Under the plateau

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The S&P 500: Is 3,800 the next stop?

Stay Cool... Yesterday, the S&P 500 broke the critical level of 4,300 once again. Today, it drifted further down. In our previous posts from the end of January, we wrote about buying the correction and the possibility of the S&P 500 falling further into bear market territory (more than 20% down from the peak) after a rebound in the short-term . The S&P 500 charts formed the "head and shoulders" pattern that in 93% of cases results in a bear market . It seems possible that if the S&P 500 does not recover above 4,300 soon, it could drop by another 10%. This will get it to around the 3,800 level. Similarly to the beginning of this year, major contributors to the S&P 500 fall would be formerly "safe haven" Tech stocks (Facebook, Amazon, Apple, Netflix, Microsoft, Google) and shares of the smaller growth companies with a limited visibility of cash flows. Unfortunately, if investors start running to the doors, the sell-off might bring down share...

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