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Rally Begins as Expected, Real Crash Not Here Yet
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In this video, Dr. Cal discusses the current state of the S&P 500 and the implications of the yield curve inversion, which has historically preceded recessions. He highlights that out of the last 12 yield curve inversions, 11 resulted in recessions, typically causing declines between 30% and 90%. He emphasizes that the current market conditions suggest a potential decline of 30% to 55% from recent highs, indicating the possibility of revisiting lows from previous market crashes.
Dr. Cal introduces the concept of the "three horsemen of the apocalypse," which includes the yield curve, consumer staples outperforming the S&P 500, and the S&P relative to Treasuries. He notes that when all three indicators align, a crash and recession typically follow, and currently, they are in agreement.
He discusses recent market movements, including a significant bounce that occurred after the market's initial decline, identifying resistance levels at 550 and 575 on the S&P 500. Dr. Cal outlines his trading strategy, including short and long positions, and suggests that while the market has seen a bounce, it is likely to face further declines.
The video concludes with a discussion of upcoming economic data releases and the behavior of the VIX, indicating that a break below the 10-day moving average could signal a bottom for the market rally. Dr. Cal encourages viewers to subscribe to his trading community for more insights and offers a special discount for membership.
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