Michael Burry's Bold $1.6 Billion Gamble - Deciphering The Iconic Investor's Market Crash Bet Amidst A 500-Point Dow Jones Plunge

• Michael Burry has placed a $1.6 billion bet on a potential stock market crash, making up 90% of his firm's portfolio.
• Burry previously earned $100 million in 2008 by accurately predicting the US housing market collapse.
• Recently, the Dow Jones saw a decline of 500 points in just two days, creating concerns among investors

Michael Burry has once again made waves with his latest move in the stock market. With $1.6 billion on the line, Burry has bet on a looming stock market crash, a decision that accounts for a staggering 90% of his firm's portfolio.

This is not the first time Burry has accurately predicted major financial events, as his foresight in 2008 made him $100 million when he predicted the collapse of the US housing market.

His bold move follows a concerning drop in the stock market. In just two days, the Dow Jones Industrial Average DJIA has declined by 500 points.

This unexpected shift can cause unease and uncertainty for investors hoping for consistent bullish moves in the market. By taking a contrarian stance, Burry's actions may evoke anxiety and doubt.

Before giving in to worry, examining the performance of DJIA highlights some key details.

Although the index has declined for two consecutive days, the overall trend is quite positive, with the DJIA up over 1,500 points for 2023.

It is crucial for investors to distinguish between temporary fluctuations and the long-term direction of the market.

Upon further examination of the DJIA, it is clear to see that a significant level of support lies just below its current price.

This support level dates back to December 2022, when the index reached its peak at $34,712. Over time, this high has established itself as a resilient support level, and the price is steadily approaching this level.

The strong support in place is further strengthened by the daily 50 simple moving average (SMA) just below it. The close proximity of the SMA to the support confirms its effectiveness.

This combination indicates the support's high level of resilience and suggests it could be a driving force for the index's upward momentum if price bounces off this level.

Investors will be eagerly anticipating the opportunity for the price of the DJIA to surpass its record peak of $36,952, which was formed in January 2022. A rebound from support should fuel their optimism and raise expectations for a long-term surge in momentum and an eventual breakout.

After the closing bell on Wednesday, August 16, the DJIA closed at $34,765.75, trading down by 0.52%.