![US500: A further correction towards 5192 before resuming purchases.](/storage/article/39313/preview/qsLahEtdrOtNPM7Y_2560x600_q70.jpg)
Bearish Scenario: Sales below 5220... Bullish Scenario: Buys above 5225 (if price fails to break below decisively) ...
2020-05-19 • Updated
The stock market behaves pretty strangely. That’s normal for a human being when any kind of crisis happens, but for us, traders, this general acknowledgment is not enough to build our strategy upon. We intend to look into the future – to lift the shroud of mystery. With the limitations of cognition, corruption of information, and an ever-changing environment producing new data inputs, there is little more than what humans normally do to predict the future – look into the past. Such an approach cannot be applied blindly, of course, and sometimes may even mislead an imprudent examiner, but at times gives valuable insight into what the future may hold. Let’s do the same with the S&P which recently made one of the strongest advancements since its epic rise from the ashes in March.
We are seeing the S&P tip at 2,940. The question is: this is another peak of a sideways cascade between 2,775 and 2,965, or it’s a precursor to a bigger drop? It may be none of that: very possibly, it is just a short stop before a new upward move. The latter, though, seems too optimistic as even the MACD suggests that the current level is at least a local high. Therefore, the most well-balanced question will probably be: will the S&P bounce upward to rise further or it will drop deeper? Maybe, much deeper…
Let’s rewind a year ago and look at the last summer. There was a similar picture of recovery after a drop. S&P started with large leaps upwards and continued the trajectory with a milder curve pulled tighter to the horizon. In the end – it made a big drop erasing almost of its gains. Quite importantly, note that the chart of the S&P was in a similar configuration with the MACD: the former was rising, gradually slowing down the upward velocity, the latter was slowly going down in waves.
As we mentioned, the coming drop is very likely. This likelihood – although not a certainty – puts us in a comfortable position to consider whether this drop will be just tactical or strategic. To make this judgment, let time align all the indications, among which the first one will be the behavior of the S&P against the support of 2,775. Let’s watch it and come back together to re-group for new observations and conclusions.
Bearish Scenario: Sales below 5220... Bullish Scenario: Buys above 5225 (if price fails to break below decisively) ...
Bearish Scenario: Sell below 39600... Anticipated Bullish Scenario: Intraday buys above 39750... Bullish Scenario after Retracement: Intraday buys above 39150
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Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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