Will the stock market crash? That seems to be the headlines around the world. With the recent news that Trump is considering firing the Federal Reserve Chairman Jerome Powell and news that Treasury Secretary Steven Mnuchin called the CEOs of the nations’ six biggest banks on Sunday, as well as to convene a “Plunge Team”. Of course, the Treasury Secretary also offered promises that President Trump had no intention of firing the Federal Reserve Chairman Jerome Powell and that the President did not believe he had the power to do so, as well.
Will the stock market crash?
Typically, the holidays bring joy to the markets in the form of rising market prices. However, overnight the market has continued to fall. Can banks prop it up? Yes, if they are inclined to do so so the important question is if they are inclined to do.
Currently the Nasdaq daily chart shows that the market is oversold (no big surprise there) and a retracement up to the ATR. However, with this week being a holiday week and the markets closing early today, we could see price stagnant, allowing the ATR to pull closer to price before resuming its course after the holidays.
Then again we could see panic start to set in and a mass sell off occur, as others have predicted. Some analysts are predicting a drop that exceeds the drop that occurred that kicked off the Great Depression ( October 28, 1929 when the stock market lost 22% of its value).
Regardless of whether traders feel the markets will sell-off or continue to increase, the one given solution is if you are still long in this market, you may want to tighten your stops or exit positions and protect the profits you have. Reminds me of the weather forecast — the weather man may predict storms so you take your umbrella with you to protect against the rain. You may not need it but, if you do, then it’s there.