S&P 500 has topped out after completing a bearish Island Reversal Pattern on June 11. The gigantic near 6% plunge on June 11 gave a strong warning of more downside to come. After consolidated for two weeks, the downside started anew by a 2.5% drop last Friday, June 26. This action triggered a series of technical sell signals, they are breaking below 200 DMA, a 3-months uptrend line broken, CCI below -100 and -DI crossed above +DI. These all points to a likely acceleration to the downside. The first downside target is 2836, the 38% retracement level of the March 23 low to June 8 high rally. And the downside may not stop at 2836 since the following negatives sure guarantee further market weakness to come.
。Worsening COVID-19 infections:
After US COVID-19 cases surged over 44000 cases in a single day last Thursday, things are getting worse over the weekend as CNN reported: "A rise was reported in a staggering 36 states, including Florida, which some experts have cautioned could be the next epicenter for infections. Officials there and across the US are also warning of an increase in cases among younger people. Florida reported 9,585 new coronavirus cases Saturday, a single-day record since the start of the pandemic. The number rivals those of New York's peak in early April (New York's new case tally Saturday was about 6% of Florida's). On Sunday, Florida's Department of Health reported another 8,530 new cases."
。IMF warning:
The IMF estimated earlier last week that the global economy would contract by 4.9% this year, before growing at a pace of 5.4% in 2021. Both estimates were downgraded from April’s forecast. “According to IMF staff models, the difference between market prices and fundamental valuations is near historic highs across most major advanced economy equity and bond markets, though the reverse is true for stocks in some emerging market economies,” IMF said.
。Quarter end portfolio rebalancing:
After stock market has surged nearly 50% since March 23 low, investors may need to rebalance their portfolio by selling stocks as second quarter is ending. Morgan Stanley estimated $170 billions worth of stocks are to be liquidated by end of June.
。Nike earnings misread and Q2 earning season:
All analyst that followed Nike (NKE) expected good earnings from Nike, but they are all wrong. NKE reported worse than expected earnings and revenues and stock dropped 7.62% last Friday. Due to COVID-19, Q2 earnings are not predictable, more earning fallouts are expected when Q2 earning season begins on the second week of July.
Verizon (VZ), Coca-Cola (KO) and Diageo (DEO), Proctor & Gamble (PG), Hersey and Unilever announced Friday it would stop advertising on Facebook (FB) and Twitter (TWTR) through 2020 on posts that call on people to break curfews, commit violent acts and topple statues - saying the sites appear to have played a role in facilitating “burglary, arson, aggravated assault, rioting, looting, and defacing public property.”. Starbucks(SBUX) announced the same Sunday. FB and TWTR were down over 8% and 7% respectively on Friday and more fallout is likely to follow on Monday.
。Tech heavy weighs are ripe for profit taking:
After leading the stock market by surging to all time highs at the beginning of June, valuations of stocks such as FB, AAPL, AMZN,NFLX,MSFT and GOOG are stretched and are ripe for profit taking. With FB, GOOG and INTC all fall below their 200 day moving averages leading the way, big cap tech stocks will likely fall.
。Sentiment is euphoric
Bulls think that stock market will never come down and bears are starting to questioning their judgement and many of them have already given up and joined the bear camp. Other signs of market froth are when retail investors are bidding up bankruptcy stock (HTZ), black own company (UONE) and a Chinese on line real estate stock with name FangDD (DUO) by hundreds and thousands percentage. A day trader think making money in the stock market is so easy, he can make money by buying randomly pick stock symbols. These are sure signs of market disaster to come.
标普500指数在6月11日完成了看跌的岛型逆转模式后已见顶。6月11日的巨幅下跌近6％强烈警告未来将进一步下跌。在经过两周的盘整之后，下行趋势在6月26日上周五下跌2.5％后重新开始。此举引发了一系列技术性卖出信号，它们是：跌破200日均线，跌破了三个月的上升趋势线，CCI低于-100和-DI向上越过+ DI。所有这些都表明下行可能会加速。第一个下行目标是2836，即3月23日低点至6月8日高点反弹的38％回撤位。而且下行可能不会在2836停止，因为以下的负面因素会保证进一步的市场弱势。
。更严重的COVID-19感染：
在上周四美国COVID-19病例在一天之内激增了超过44000例之后，如CNN报道，周末情况变得越来越糟：“据报道，包括佛罗里达在内的36个州感染惊人地上升了，一些专家警告说佛罗里达州可能会是新兴疫情感染中心热点。该州及美国各地的官员们警告年轻人的病例增加。佛罗里达州星期六报告了9585例新的冠状病毒病例，这是自大流行开始以来的单日最高记录。这种情况可和纽约州4月初达到高峰时相比（纽约州星期六的新病例总数约为佛罗里达的6％）。周日，佛罗里达卫生部报告了另外8,530例新病例。”
。IMF警告：
国际货币基金组织上周早些时候估计，全球经济今年将收缩4.9％，然后在2021年以5.4％的速度增长。这两个估计均低于4月份的预测。国际货币基金组织说：“根据国际货币基金组织的工作模型，大多数主要发达经济体股票和债券市场的市场价格与基本估值之间的差异接近历史高点，但某些新兴市场经济体的股票情况则相反。”
。季度末投资组合再平衡：
自3月23日的低点以来，股市已飙升了近50％，投资者可能需要在第二季度结束时通过出售股票来重新平衡投资组合。摩根士丹利（Morgan Stanley）估计，6月底钱将有价值1,700亿美元的股票被卖出。
。Nike的收入误读和第二季度的收入季节：
跟踪耐克（NKE）的所有分析师均预期耐克将获得可观的收益，但他们全都错了。 NKE报告的收益和收入均逊于预期，上周五该股下跌7.62％。 因为COVID-19疫情的影响，第二季度的收入是不可预测的，当第二季度的财报季节在7月的第二周开始时，预计会有更多的负面财报。
。FaceBook和Twitter的影响：
Verizon（VZ），可口可乐（KO），Diageo（DEO），Proctor＆Gamble（PG），Hersey和Unilever周五宣布，将在2020年之内停止在Facebook（FB）和Twitter（TWTR）上刊登广告。煽动人们打破宵禁，实施暴力行为和推倒雕像-说这些平台似乎在促进“入室盗窃，纵火，加剧的袭击，暴动，抢劫和破坏公共财产方面发挥了作用”。星巴克（SBUX）在周日也做同样的宣布。周五，FB和TWTR分别下跌了8％和7％以上，周一可能还会继续下跌。
。重磅科技股下跌调整时机已经成熟：
在6月初飙升至历史最高点而引领股票市场攀升，FB，AAPL，AMZN，NFLX，MSFT和GOOG等股票的估值已经被推得过高，获利了结时机已经成熟。已跌破了200天移动平均线的FB，GOOG和INTC将带领大型科技股下跌。
。投资人情绪过度乐观：
多头认为股市永远不会下跌，空头开始质疑他们的判断并且许多空头已经放弃看跌并加入了看涨阵营。这是股市见顶的显示。见顶的其他迹象还包括散户投资者在几天内推动破产股票（HTZ），黑人经营公司（UONE）和名称为FangDD（DUO）的中国在线房地产股价上升几倍以致10多倍。即日交易员认为在股市中赚钱是如此之容易，他可以通过购买随机选出的股票代号来赚钱。这些都是带来市场灾难的迹象。
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