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3 Fundamental Reasons The Stock Market Can Break (Video)


  • Technicals look healthy but may have hit some resistance.
  • There's three obvious fundamental reasons to potentially break this market.
  • But let's see if we get directional confirmation.
  • Looking for a helping hand in the market? Members of Nail Tech Earnings get exclusive ideas and guidance to navigate any climate. Get started today »


The market (NYSEARCA:NYSEARCA:SPY) has traded sideways for a week or so. I've been saying it's important to respect direction as a guide for trading. So sideways isn't a great guide. Still I think there's three fundamental reasons building that can potentially drive the next move lower.

In this video I'll tell you what I'm watching and what I need to happen. I'll also talk about how to confirm a follow through.

First Reason For Stock Market Break: Taper

The first reason has to do with a big Fed taper. Even though these numbers are still huge, there's still a taper going on.

They went from $60B a day in buying a few weeks ago to now to now $6B-7B a day. That's way down. These are huge numbers still but way down. I think that has the risk to soften up the market on any bad news.

Total Per Week Per Day
2020-04-01 $4,768,238,706,062 $432,227,323,097 $61,746,760,442
2020-04-8 $5,060,118,230,012 $291,879,523,950 $41,697,074,850
2020-04-15 $5,319,687,288,500 $259,569,058,488 $37,081,294,070
2020-04-22 $5,492,341,792,900 $172,654,504,400 $24,664,929,200
2020-04-30 $5,534,933,870,549 $42,592,077,649 $6,084,582,521
2020-05-07 $5,583,378,870,000 $48,445,001,000 $6,920,714,429


Second Reason For Stock Market Break: Fundamentals

Non-farm payrolls are below. They report tomorrow.

Non Farm PayrollsSource

Fed officials have been warning us all week for a key non-farm payroll number reported tomorrow. In tandem with the Fed taper, there's a chance stocks can actually trade weak on bad news.

Third Reason For Stock Market Break: Trump

President Trump said he plans to retaliate against China for allegedly purposely releasing the coronavirus. That has not hit the market because there's been no official move, just threats. But when we get something more official I think there's a good chance for a break.


Technicals have looked fine but fundamental factors have been building potentially to give this

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This article was written by

Elazar Advisors, LLC profile picture
Hi, I'm Chaim Siegel. I've run Elazar since inception. I've worked for big hedge funds as a trader, analyst, PM and water boy. 
Starting out I could make a mean straight black coffee. But ask me to add some sugar or milk though was a problem. So they got fed up and said, just give him some stocks to follow. That was in the 90s tech boom. Yeah. That worked out. 
So, now, mid-life crisis I enjoy second guessing the Fed, which is usually a good strategy. They are not traders, they have no risk discipline, they are having way too much fun with this QE-QT thing and because of their powerful position, are usually way too over-confident in their decision making which is a hint to bad decision making.
My customers have seen that I've been net net pretty good at consistently second guessing the Fed.
Our EPS estimates factor into Street numbers.
I've been on CNBC and a few other places.
But mostly I really just enjoy second guessing the Fed and keeping it simple.
Wishing you all continued success.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (77)

Love your analysis. You mention watching 281 as a key signal for a downtrend. The market hit 279 intraday today, but ended above 281. Does intraday mean anything to you, or is it only worth looking at market close?
Elazar Advisors, LLC profile picture
I think below 290 is now bearish. I switched on Monday night for subscribers.
Vivian Embro profile picture
As a consumer, I am tired of China. Yes, I am very willing to pay more for goods NOT made in China. I always but goods not made in China. If I cannot find something I would like that is only made in China, I do without it.
Daryl P profile picture
LMAO.. Ok 3- 4 decades to late for this mentality.

Where were you when they were moving to China and taking good union American jobs with them...

I laugh because this country pissed on every blue collar American in the 80's- 90's. They all picked up and moved and blamed American workers for making too much money.

SO I ask YOU and everyone. >Where the F$%^ were you then ?

SO this fake narrative about evil China is a joke because Wallstreet companies were running to China and we actually gave them tax breaks for their troubles

Might be time to get tired of the USA that never had you back and sure as hell does not care about you todayR
TJ Roberts profile picture
@Daryl P That's right, but it's actually 5 decades! When shill Nixon opened relations with China and took us off the gold standard in the1970's, allowing for the money printing presses to ramp up endlessly. Heck, we've digitally printed $1T in less than 1 month. The Goldman Sachs boys are in the White House and have been for some time — Paulson, Kashkari (Cash Carry aka Bailout Czar now Minnesota Fed pres.), Mnuchin. The combining of the Dept of Treasury and the Federal Reserve is borderline criminal without a vote, but the majority is so dumbed down, give them a free phone, give them a $1200 check, and they're fine. The destruction of the middle class was what drove the populace to Hitler in the '30's. In a way, you can say that is happening now, but wait, we're going to have a V-shaped recovery. I sure hope so. But with oil prices floored, and 30M+ people out of work, it makes for a recipe for disaster. How can the economy come back if puppets like Newsom, Deblasio, Cuomo and all the rest, say that this is the new normal; of course, they're fine behind their walled citadels with their year's supply of ice cream like Pelosi showed off. Maybe Saudi Arabia will go down first; their reserves are now down to $450B. War was what brought us out of the last Great Depression. I'd rather see the fraud exposed for what it truly is and have the perps jailed, but they're building up that 2nd wave right now, and a lot of people watch the MSM.
chpared24 profile picture
Amen!! Well said!
pat45 profile picture
FED money is huge...but the Corona numbers from Georgia scary. They are rising way too fast from 600s to 900s now only over a week after reopening..I hope other states more careful. WE NEED MORE TESTS AND TREATMENTS
TJ Roberts profile picture
@pat45 Time to wake up... www.youtube.com/...

No one dies from CoronaVirus under 50 without having other complications. The perpetrators of this swindle should be imprisoned, starting with Gates, Fauci and Berx. It truly is amazing how heart attacks, influenza, and all sorts of other deaths have practically disappeared because the sham is in effect. Take off your masks and go outside and live or die. I like how the working class (middle class) people at Honeywell in N.M. blasted Live and Let Die when Trump and company visited...too bad Trump is surrounded by shills like Fauci and Berx. All you need to do is research where they got their money from... Fauci got $100M from B&G foundation.
Maxwells Demon profile picture
LOL, please wipe the Kool Aid stains off your lips before commenting.
@TJ Roberts Every time I read a comment like this I'm reminded of just how f'cked my home country is right now. I live in Hong Kong where we've been wearing masks for months and life is good. Put one on for my parent' sake if not your own.
Convoluted profile picture
The US Core of Engineers control numerous lakes across the country. By utilizing the dam structure they can either allow water to accumulate, or release it downstream .

The concept of fluid dynamics applies to money/liquidity, and cuts through a lot of economic hokum. If I have an infinite amount of dollars (liquidity), I can push the SPY to 10,000, 100,000 or whatever number I want. The concept of earnings is meaningless.

In essence, I allow people to play at their game, because I purposely inject a random component. I want to provide them with a suitable distraction, lest the absurdity of the whole damn thing slap them in the face.
I think you would have an interest in the site www.USDEBTCLOCK.org The numbers there would support your position, especial: Unfunded Liabilities.
HLB1 profile picture
I don't see the same numbers for the Fed taper on the www.federalreserve.gov/... site. Can you help me find them?
dhughes327 profile picture
SPY is presently in a narrowing triangle between the 200 day and 20 day moving averages. When it finally breaks out, that is the direction it will head for the next major move up or down.
Repeated here many times before that those who can not view through the lens of DOLLAR will fail to understand this market ..
Market leading index is about to break up, not break down ..
I'm inclined to agree although the market seems to keep bouncing up 1-1.5% overnight all the time, almost like it can't go down even if it wants to!
LT Capital Gains profile picture
Where have you been the last 2 years to have just noticed
It appears that the SP500 is in trading range because there are good stocks and bad stock under the index (tug of war)...?

bad stocks that drag down the index and could go bankrupt would be:

Cruise lines
Restaurant chains
Oil and Gas Companies
Rental Car Companies

There are better parts of the market to play in, other than the SP500.

Good Luck.
Elazar Advisors, LLC profile picture
@Maverick 2021 In my career I've found that the SPY is the best measure to use for the overall market. So that includes its components. Yes there may be better opportunities elsewhere but that's the main gauge for me to know where everything is headed.
buy microcap biotech stocks with potential virus vaccines
Green Elmo a.k.a. User 48289781 profile picture
"buy microcap biotech stocks with potential virus vaccines"

Tell us which ones to buy.
Thank you for your overview , even noob like me can understand.
MyStockVault profile picture
I could give you 10 reasons for the market to break... Who the heck knows!
Thewise1 profile picture
Stock market only cares about going up. The more Bears I see on Seeking Alpha, the more Bullish I become on our way to SPX 4000 plus.
Elazar Advisors, LLC profile picture
@Thewise1 Im not a bear. I get bearish and bullish but i have no problem changing.
Manufacturing has been down since Clinton gave away the country to China what is really up are our service industry and I don't see it going down to any time soon. Companies have to run and they need the latest tech to do it and they are buying. I don't see the market changing in the next quarter other than an uptick when people are free to shop as they like. They've been cooped up for far too long already and when they are let loose the numbers will climb. I rarely went to the store in the last two weeks. I have a lot to buy when things open up. I have an exhaust system ordered for my vehicle they had a four week delivery time as it was before the virus and then they told me they have no idea when they will be back to work in California and when it does it may be months before my order gets filled. The guys that are building up cars and upgrading vehicles haven't stopped. They just can't buy a lot of what they need right now.
Elazar Advisors, LLC profile picture
@TomM5060 Fair point. the only thing is to watch new virus counts. Hopefully it stays down even when people get out to shop.
Manufacturing has been down since stock based compensation (options) moved corporation to be hyper concerned about cost cutting and making "tough" choices to cut benefits and move production overseas resulting in higher profit>higher stock price> more money in their pockets. Growing revenue is tough; cutting costs is comparatively easy. Salary and bonuses don't compare to the stock based compensation. So you can blame the C level execs for moving jobs overseas, not Clinton. Has been great for stockholders, not so great for America as a whole. Unless you think we were in "the greatest economy ever" in which case such logic will be a wasted discussion.
Buckeyes1953 profile picture
I have news for you the release of this virus was planned and purposeful and for the leader of the free world to not take action along with the rest of the world would be foolish. China needs much of what we have like food and natural gas and they do not like a businessman playing in the sandbox of the world. China wants to destroy the world economy and the use of the petrodollar. China is weaponizing more viruses and if we do nothing the next virus will kill millions of people worldwide. There is also no way we should have let China buy Smithfield Foods. We should take it back and sell them pork at a high tariff cost and bleed China dry. We need to also have a huge fleet presence in the far Pacific. We should cut China off from the rest of the free world.
"We should take it back and sell them pork at a high tariff cost and bleed China dry."

What pork?

We are selling them BYND Meat, though.
Crazy town!!
ImRanger profile picture
Great weekly update. Nice to get updated on the overall status, I agree with you on many factors. Keep it up.
Elazar Advisors, LLC profile picture
@ImRanger Glad to hear. Wishing you success.
bwoodard profile picture
You really think the technicals look good? As of now, it kinda looks like it's setting up to drop to around 270ish with that head and shoulders price pattern
Elazar Advisors, LLC profile picture
@bwoodard I hear you. Higher lows higher highs and light volume is bullish. I dont think its so clear technically down but I think the news can get it there in the next few days potentially.
I recommend you label your charts. Your second bar chart above has absolutely no label as to what the numbers shown represent. Not very helpful.
Elazar Advisors, LLC profile picture
Good observation. Thank you.
One reason the fundamentals don't matter....the Fed. The S&P would be trading around 500 if it wasn't so manipulated.
Elazar Advisors, LLC profile picture
True. I agree with you. Thats why i think technicals matter so much but fundamentals aren't so obviously a driver. You really need technical confirmation for a call.
Do you honestly think the S&P 500 would be trading 83% below its current level without Fed “manipulation”??? That is ridiculous.
Elazar Advisors, LLC profile picture
@viachicago Did you notice oil that didnt have Fed intervention?
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