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Author Message   Gotcha Kurra Bewarse Username: Gotcha Post Number: 1482 Registered: 01-2007 Posted From: 104.10.216.199 Rating: N/A Votes: 0 Posted on Tuesday, August 11, 2020 - 3:21 pm:    Market Crash Indicator is Firing Red Technicals Disclaimer: I did not invent this indicator or find this correlation. All credit goes to a very intelligent trader on Twitter named Kerberos007 who might be borderline obsessed with finding data-based crash indicators. The Indicator: Let me be clear. I am by no means a great trader. But I found this guy’s crash thesis and checked it against every SPY crash in recent history that I could. It's deadly accurate. I feel like a chimpanzee trying to explain the concept of why fire burns but if it saves some of you guys from not being able to afford the bubble wrap and capri-suns you love, maybe it’s worth it. If you graph the correlation between the daily value of the SPX and GLD, you will see an interesting pattern emerge. In the period before a market crash, they will begin to have a higher correlation. At some point that correlation will become so positive that it crosses the threshold of 0.6. From what I can see, how long it stays above 0.6 doesn’t really matter. The most important part is that when the correlation starts to break down and returns to 0.6 on the way down, all hell breaks loose within 1-3 days. When it triggers, it doesn’t always mean Armageddon type SPY damage but it will be a significant pullback. For example, you can see that it was triggered on 6/5 which was just a couple days before our last significant pullback. Where is it Now: As of today 8/11/20 the correlation is at .64 and dropping like a rock. The red line on the bottom graph is the 0.6 line. I’m not telling you guys to go all in on puts because putting all your faith in one indicator doesn’t make sense. I’m just saying that when that .60 threshold is crossed just make sure you are hedged effectively for at least the next 3 trading days. Maybe just a little more bearish than usual just in case things get froggy. TLDR: Be prepared for a big red day once the correlation between GLD and SPX decreases to 0.60. Good luck my brothers.