The price is moving according to my last analysis on July 29th of the S&P 500 Futures. The market is taking a breath from last week, yesterday it closed more or less at that support area of $4100.
We still have some important earnings incoming, I stick with my point that we can use the momentum to get to $4200 or even higher. However, in order to break this DOWNTREND, we need to get above $4500 and maintain.
I'm not going to spend time talking about breaking the resistance of $4500, as I see it extremely unlikely to happen.
During the next few days, the market can decline till $3950 support, in order to get some volume and make new higher highs around $4200.
The economic environment is bearish for the stock market, unless the FED decides to decrease interest rates and start printing again, avoiding fighting inflation, destroying the currency as a result.
The scenario that I think is going to happen is that we will continue the downtrend that started in the beginning of the year 2022. From my humble opinion, this was just one more rally in a bear market, maybe a bull trap that can last a few weeks more.
I see the market between a range of $2800-$3500 till the end of the year, unless something big happens and reverses the downtrend.
Honestly, I think they are just trying to keep the market up the longer they can, in order to sell their balance sheet at higher prices, starting from September.
This thing can reverse in every moment, or it could continue to be bullish the next trading sessions. Better wait to trade to the downside till some clear reversal appears.
👌🏼 nicely written and spot on imo. Def a bear rally here. I’m short (inverse) by default until 3400(ish) to reconsider then. However long that takes. Only comment is about the fed balance sheet and propping the market. They only own treasuries and mortgage backed bonds. $9 T worth. The issues they own have and are going to continue to drop in value bc of rate increases. Equity mkt not related meaningfully to what they call their balance sheet.. although equity mkt has its share of challenges due to the same..
Alt-B
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@Alt-B hope that makes sense and isn’t annoying. I really want people (esp in TV) to understand how QE works and why “printing” money is not like most ppl imagine.. they buy us treasuries…in order to artificially boost demand and therefore keep bond rates low. (Agsin artificially). The money they use to buy them doesn’t exist, and they don’t actually print it. But the effect is as if there were 9t more dollars in circulation and that there are more treasury buyers than there actually are. Now they’re unloading it taking that money out of circulation (even though it was really available, more theoretical. The printing is implied when you ask “wait where’d they get the money?”
GenadiYankov
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@Alt-B, Thank you for your comment! I completely agree with you. The thing is that they have been keeping interest rates extremely low for a long period of time, increasing the supply of dollars through the quantitative easing that you mentioned. The USA has not been in a real recession for 13 years, the longest period for now. I think that they have artificially increased the demand, and now it will probably take a couple of years till this supply is subtracted from the economy.
Alt-B
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@Alt-B to conclude my rant.. the point is to keep our borrowing costs (us gov bonds) low. Which impact rates of all other debt by extension. It’s lowering rates / ensuring they stay low when the fed rate is already at 0%. Financial and economic engineering…
Alt-B
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Stock buybacks are kinda similar. Artificial demand to raise the stock price. Why is they legal? 🤔
GenadiYankov
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@Alt-B, stock buybacks are created in order to positively impact the EPS of companies, less shares, same or higher profit, higher EPS results into an increase in the stock price, which makes the owners of the company wealthier, most of them institutions, banks, managers, the same people that are ruling ;)
Alt-B
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@GenadiYankov, Yes and there may be further consequences of all of this QE over the past 15 years...We've meddled with market forces several times now.
Alt-B
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@GenadiYankov I think there should be a fixed float of shares. When I hear buyback announced with enthusiasm by a CEO what I hear is..."hey guys we're gonna participate in market manipulation to boost the price per share! Who wants to come??!"