Stock market flash warnings + crypto liquidations — brace for a broader market d
Thesis
The S&P 500 is currently finishing right on the edge of a critical breaking point that, if crossed, signals much larger losses ahead in stocks. Simultaneously, the crypto market is in absolute panic: Bitcoin crashed to a 21-month low, wiping out $600 million in an hour, and forced liquidations are cascading across Ethereum, XRP, and Dogecoin. When investors are forced to sell their crypto holdings at any price to cover losses, they often have to sell their safe stocks too, dragging the whole market down. The combination of a structurally weak stock market chart and a panic-driven crypto crash makes a bearish bet on the broad market highly attractive.
Strategy approach
Build a trend-following short strategy on the daily timeframe for SPY (S&P 500 ETF). Enter short when SPY closes below its 50-day moving average and Bitcoin (BTC) drops more than 4% on the same day. Exit if SPY closes back above its 20-day moving average, with a max hold of 20 days.