Dear Steemians Sem here once again with a new blog! This time a short one that is about the current state of the stock market. 2018 has been a crazy year for many investors due to many different factors in the economic world. Events such as the global trade war, brexit, the fed, bank of England, the housing market all have led to the question of whether or not we will see a new recession. Many indicators and highly learned economists have predicted that a recession is about to come. Looking at the current market conditions it doesn't look like they were wrong.
I am going to cover the following topics:
- What is a recession?
- The market conditions right now
- The kiss of death sell signal
So now we have covered up everything it's about time we jump right into what you came for!
A market recession in my own words is when the economy declines significantly after a continues market growth for several years. Now in order for you to understand why such a dramatic drop in the market can happen, you have to understand that the market moves in cycles. Funny enough I wrote about this earlier in an older blog so I simply used that same text here as I wrote before.
The market moves in waves every single day, week, month and year. These waves exist because of the invention of allowing people to borrow money (credit). Money they don't have. When the economy is optimistic, interest rates are low and people are more tempted to buy. When someone is eager to buy it's someone else’s income. His income grows and he is eager to spend more as well. This results in economic growth. This also works the opposite way. When interest rates are high, people are less tempted to buy and that means that somebody else has a lower income. He eventually has less to spend and this will result in a recession.
At the moment a lot of things have changed in the economic world that's too much to name right now. But what I can see is that the things that have changed have a major impact on the stock market. One of the clearest indicators are the indices of America itself such as the S&P500.
The stock market has been in a bull market since the last crash from 2008. There have only been higher highers so far and the only moment where we saw a pullback was in 2016 that was brought back up immediately as soon as price hit the weekly 200SMA. Currently, we have bounced back from that same level but struggle to surpass the weekly 20EMA. If the market isn't able to surpass this price point it could be very likely we will head for lower lows and maybe even a real market crash.
My favorite youtuber Alessio Rastani explains very well on his youtube channel what exactly the outcome can be if the price gets rejected at the current price it is at today. He also has a video where he explains very well what the difference is between a market crash and just a market pullback.
I don't trade indices, only forex, and crypto. I have no interest in trading any indices but do watch them often to get a quick update on market conditions.
I hope this article gives you a more clear vision on all the rumors about a market crash.