SP 500 Volatility Equals Profit !!!
How To Profit From S&P 500 Downturn
Watch this video to the end and we’ll show you how to profit from S&P 500 volatility below, after the video (don’t leave the website).
100% of the Time THIS Triggers an SP500 CRASH | Retail Investors Will Flip Bullish Before It Happens
85,584 viewsApr 28, 2022
198K subscribers
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FULL VIDEO TRANSCRIPT
0:00
hello and welcome back to game of trades
0:02
your number one channel for videos on
0:04
the stock market and cryptocurrencies i
0:07
am very excited about this episode today
0:11
we have a lot to cover a lot of things
0:13
going on in the market
0:15
lots of panic here huge amount of
0:18
concern amongst investors and there’s so
0:21
much going on underneath the surface
0:23
it’s going to be tough to cover in just
0:25
one video but i’m going to try my best
0:28
to now just as a quick
0:30
background anybody who’s been following
0:32
this channel for some time knows that we
0:35
are very well aware of the long-term
0:38
risk in the equity markets just this
0:41
chart represents that very well this is
0:44
the real earnings yield of the s p 500
0:47
so real means inflation adjusted so when
0:50
you adjust earnings for inflation it
0:54
basically tells you how attractive it is
0:56
to buy the s p 500 current levels and
0:59
when you see the real earnings yield dip
1:03
below zero right this is the zero line
1:06
so it goes into negative territory it
1:08
creates a recession it creates a bear
1:12
market even in the s p 500 right all of
1:15
these red circles have corresponded to
1:18
lots of volatility in the financial
1:20
markets the 1907 panic world war one
1:24
then we get into the great depression
1:26
this is 1937 right here big 50 bear
1:31
market that’s pretty much the same bear
1:33
market as world war ii then you’ve got
1:35
the bear markets of the 70s this was the
1:37
1974 top then the 80s volatility with
1:42
volcker that was tightening into
1:43
recessions back here in this zone
1:46
inflation numbers were extremely high
1:48
and the market was going down the market
1:51
got absolutely destroyed in real terms
1:55
then you’ve got the top of the dot-com
1:56
bubble the top of the
1:59
great financial crisis before the great
2:01
financial crisis and then you’ve got
2:03
2022 100 of the time
2:07
this signal
2:09
triggers bear markets on the s p 500 so
2:12
we know that we are heading for a major
2:15
repricing of the stock market somewhere
2:17
in the next year or two a lot of the red
2:20
flags that we’ve been looking at to tell
2:23
us
2:24
what long-term stock market returns are
2:26
going to be a lot of these indicators
2:30
have been
2:31
showing some red flags so the question
2:34
is have we already started that bear
2:36
market was that the top of the bull run
2:39
that we’re not going to see again for
2:41
years to come or are there still
2:44
fundamental driving factors that could
2:46
drive the stock market rally a lot
2:49
higher before we get that top that’s
2:52
what we try and do in these videos we
2:54
bring you guys all the data all the
2:56
research that we make and put it out for
2:59
free for you guys to enjoy if you’re
3:02
interested in following these crazy
3:04
markets with us make sure to smash that
3:07
subscribe button of course don’t forget
3:09
to click on that like button as well if
3:11
you enjoyed this video and now without
3:13
further ado
3:14
let’s get right into it
3:20
[Music]
3:22
all right so i want to start off by
3:24
quickly talking about this
3:27
line here that was broken on the daily
3:29
time frame right we’ll we’ll see what
3:32
happens towards the end of the week but
3:33
when i look at these multi-year trend
3:36
lines i’m really looking at that weekly
3:38
close weekly close under it that’s bad
3:42
news from a short-term technical
3:44
standpoint but that’s not what i want to
3:46
do here what i want to do is take a look
3:49
at the rsi on this chart and we’re going
3:52
to take a look at the four hour try
3:54
because we’ve had a pretty violent
3:56
downtrend here and nothing goes straight
4:00
down nothing goes straight down online
4:02
you can think you’re in a bear market
4:04
you can disagree with us that’s
4:06
absolutely fine but there is such thing
4:08
as an oversold short-term reading and
4:12
what we had here right first of all
4:14
jerome powell spoke here market went on
4:17
an absolute tank here and it triggered
4:20
this signal on the rsi this oversold
4:25
technical signal here and you can see
4:27
just quickly looking back it’s only
4:29
happened a handful of times obviously
4:31
during this uptrend it corresponds to
4:34
big bottoms on the s p 500 you can see
4:36
that systematically right here but what
4:39
we’ve had since that reading you can see
4:42
let me zoom in a little bit more and
4:44
this is short-term stuff right i don’t
4:46
like putting out too much short-term
4:48
trading content but i feel like that’s
4:51
needed in the context of the size and
4:55
the volatility of the move that we saw
4:57
throughout the past few days so we’re
4:59
going to move on in just a second but i
5:01
want to quickly show you this here this
5:03
lower low on the price following this
5:06
rsi reading that’s extremely oversold
5:09
and this higher low on the rsi here
5:12
right so divergence between the momentum
5:14
and the price in the short term i look
5:16
at that and i say all right we’re
5:18
getting close to the bottom here unless
5:20
there’s some big black swan event this
5:22
is going to lead to a short-term rally
5:24
and i’m going to show you a few examples
5:26
of that first of all this is an example
5:28
where we had a lower low on the price
5:31
and a higher low on the rsi led to a
5:34
nice rally if we zoom out a little bit
5:37
more we don’t have any divergence here
5:39
until we get to october right here huge
5:43
huge move down you can see it in fact it
5:45
looks a little bit similar to what we
5:47
had here a type of bullish flag here a
5:50
lot of people were looking at that for a
5:51
breakout and it actually broke down and
5:55
accelerated to the downside before
5:57
triggering this oversold rsi reading and
6:01
then continuing to diverge in the days
6:03
to come eventually leading to a big
6:06
bottom at support that’s another point
6:08
just seeing this type of development
6:10
with no support under it you know that’s
6:12
not the same as when you see this type
6:14
of short-term development when getting
6:17
near a very important level of support
6:20
and let me
6:21
get back to 2022 what are we doing here
6:24
we’re seeing this rsi divergence build
6:28
while getting to pretty much the
6:31
ultimate level of support which is this
6:33
low march low so this is constructive
6:36
for the short term now let me get back
6:38
to one of the most concerning charts
6:41
that we’ve covered over the past few
6:43
months and that is the defensive sector
6:45
divided by the s p 500 we’ve had
6:47
consumer staples which are generally
6:49
seen to be very defensive we saw them
6:52
break out of this pattern here this head
6:55
and shoulder pattern and this is
6:57
something that we talked about in one of
6:59
our articles back here towards the end
7:02
of march we were looking at this and we
7:04
said that if we break out that’s a bad
7:07
signal if we break out above this line
7:09
of resistance it begins to look bad in
7:12
the short term for the s p 500 now we
7:14
did have that breakout and it’s a head
7:17
and shoulder pattern so that’s pretty
7:20
concerning because we talked about it
7:22
last time the measured target of the
7:24
head and shoulder is the height of the
7:27
head and you take that same measurement
7:28
and you take it out from the break of
7:30
the trend line that is how they work and
7:33
they are very very high probability
7:35
trades once they break so we’ve had that
7:38
break nothing’s a guarantee but it’s
7:40
very likely we’ll be heading to here now
7:43
why is that concerning let me actually
7:45
put this into
7:47
context i’m going to put the correlation
7:50
coefficient
7:52
between
7:53
this ratio and the s p 500 and it shows
7:56
you that the correlation is negative
7:59
it’s below that zero line so as a
8:01
general rule of thumb it’s not perfect
8:04
but as a general rule you can say that
8:06
when this is going up when this ratio is
8:09
going up the s p 500 is going down so
8:12
that is concerning if you’re expecting
8:14
this ratio to go all the way up to
8:17
this zone here but i do want to remind
8:19
you
8:20
that this can happen a number of ways it
8:22
doesn’t mean that the ratio is going to
8:24
go straight up into this zone and the
8:28
market is just going to crash
8:29
immediately right if we have if we have
8:33
this type
8:34
of price action right let’s say for
8:35
example we have this type of price
8:37
action we have a little bit more
8:39
volatility in the coming days and then
8:42
we have this move back down here to
8:45
retest
8:46
that neckline before we ultimately get
8:50
into that big volatile move towards the
8:52
end of the year so i’m not this is not a
8:54
prediction this is just to keep your
8:57
mind open to different scenarios and in
9:00
that case that would mean we could see a
9:02
recovery
9:04
for 175 days in my opinion based on the
9:07
research that we’ve made
9:10
we think it’s going to take us at the
9:11
very least back to the all-time high i
9:14
wanted to show you something that we
9:15
talked about in the article that we
9:17
posted at the beginning of the week we
9:20
took a look at the vix here uh the vix
9:23
that had bounced off this trend line
9:26
here i’m going to talk about that in
9:27
just a second but most importantly we
9:29
have this trend line here that goes from
9:31
the top of the covet spike right this is
9:34
the volatility index of the s p 500 so
9:37
when you have this big spike in
9:39
volatility that’s when the market is
9:41
crashing and that’s the coveted low and
9:44
so this is the volatility here these
9:46
spikes are the volatility that we saw
9:48
towards the beginning of the year and
9:50
you can see we have this nice downtrend
9:52
line that could potentially act as an
9:55
area of resistance and i’m going to show
9:57
you why
9:58
that works it worked between 2018
10:02
and
10:03
2020 you have this nice trend line that
10:06
captures all the big volatility spikes
10:09
now this was towards the beginning of
10:11
the week and you can see we weren’t
10:13
quite there yet we weren’t quite at that
10:16
vix trendline resistance if we press the
10:19
play button on this chart and let me
10:21
zoom in a little bit you can see we tag
10:23
that trend line perfectly and so the
10:25
risk reward on the s p 500 is really
10:28
starting to shift dramatically here very
10:32
very different to what we had
10:34
right here at the
10:36
towards the end of march and by the way
10:38
this is why we have the website we made
10:40
this service so that we could give you
10:42
guys frequent market overviews on
10:46
everything that we’re looking at all the
10:48
indicators all the developments that are
10:50
important to us and most importantly how
10:52
to find the proper risk reward in the
10:55
market because you can be bullish on the
10:57
market have a macro bullish thesis
10:59
that’s great but if you can’t use tools
11:02
to time it properly you’re going to get
11:05
left behind the vix is now at very
11:07
elevated levels meaning we have wild
11:10
moves on the s p 500 and that often
11:13
leads to the biggest trading opportunity
11:17
so we look at these types of charts to
11:19
evaluate that risk reward and we’re
11:22
going to be doing that very frequently
11:24
and doing that very very meticulously
11:26
over the next few weeks as we see that
11:28
volatility play out and we try and
11:31
identify those levels and those
11:33
opportunities in the market right that’s
11:35
why on the 31st of march as we had that
11:38
massive rally on the s p 500 we took a
11:41
look at the vix and it was at support
11:45
right so you don’t buy at support you
11:47
buy when the vix is at resistance here
11:50
this chart was really telling you that
11:53
volatility was at a higher probability
11:55
of expanding again and seeing a pullback
11:57
on the s p 500 and that’s why since
12:01
the end of march
12:02
our rating on the s p 500 our short term
12:06
rating on the s p 500 has been a whole
12:09
now the pullback was definitely a lot
12:10
more aggressive than what we were
12:12
anticipating there was definitely a lot
12:14
more volatility that’s why we use these
12:17
kinds of tools like the vix like
12:19
sentiment like put call ratios inter
12:21
market analysis all of the things that
12:23
we look at to give ourselves the best
12:26
odds so that’s what i mean when i say
12:28
that the risk reward here is changing
12:31
it’s shifting very rapidly on the s p
12:33
500 we’re going to be changing our short
12:36
term rating on the s p 500 and in fact
12:38
all the sectors and assets that we look
12:40
at we’re going to be changing them this
12:42
week if you want to have access to this
12:44
kind of research that really gives you
12:47
an edge
12:48
over other traders in the market and
12:51
gives you that additional insight to
12:53
navigate the market make sure to go to
12:56
gameoftrades.net so i hope you guys
12:59
enjoyed this episode if you did make
13:01
sure to smash that like button it really
13:03
does help
13:05
push our videos out to a wider audience
13:07
and post the effort and time uh that we
13:10
put into putting out this research
13:14
it helps push it out so it is really
13:16
appreciated in the meantime i wish you
13:19
good luck on your trading and see you
13:22
next time
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