I've been telling my trading-friends that it is a wave 3 bull market for the past 3 weeks. Ever since I had to cut loss on a short around 15th May. You see, the beauty about Elliott Waves is that you always have an alternate count that you can rely on.
1 month back, I had thought that the wave up could be a 3-waves A-B-C and thus another fall is imminent. However, when I realized I was wrong, I immediately switched over and began telling people that it is a bull market. I can give you 2 macro reasons here to support this argument:
Macro:
1. This is an election year. In order for Trump to be re-elected, the stock market has to be up. This is a well-known fact in the macro-hedge fund world that no presidents were re-elected when the economy was in a recession (actually one president was and you should research on it). Thus, on a fundamental level, the Republicans will do anything to get the stock market up and the economy going. Both the fiscal and monetary policies will be engaged in fuller-than-full force.
2. The Covid-19 virus had triggered an emergency brake in the global economies and the global financial markets. Yes, it was scary at the start, but 3 months after the economies were shut down, people are realizing a greater fear: starvation and desperation from lack of income and thus lack of food on the table. The negative effects of Covid-19 has been downplayed ("Hey! It's not really fatal for the young and healthy!", "We can always wear a mask at work!", etc.) People on the street needs the economy to be opened. It is a "NEED" and not a "WANT". People needs jobs and income and food on the table. If you are an investor, you have to grab stocks while they are still cheap now. And what is the risk really? The top 5 stocks in the S&P 500 accounts for 20% of the entire S&P and they are all technology stocks!
Technical: You can see my technical analysis on the chart.
Now, the question is: is it still viable to long ES? To be honest, I think it is better to stay out for the time being. Because the up-move has been scary (even for people who were longed the market) and the risk now is really on the long side. But do you want to short into this market? Maybe buy some put options (you have to guard against huge loss in your account in case this thing continues to sprint up). So if I am going to long, I will probably wait for a clear 3-waves correction before I will attempt it and even then, only a small amount.
1 month back, I had thought that the wave up could be a 3-waves A-B-C and thus another fall is imminent. However, when I realized I was wrong, I immediately switched over and began telling people that it is a bull market. I can give you 2 macro reasons here to support this argument:
Macro:
1. This is an election year. In order for Trump to be re-elected, the stock market has to be up. This is a well-known fact in the macro-hedge fund world that no presidents were re-elected when the economy was in a recession (actually one president was and you should research on it). Thus, on a fundamental level, the Republicans will do anything to get the stock market up and the economy going. Both the fiscal and monetary policies will be engaged in fuller-than-full force.
2. The Covid-19 virus had triggered an emergency brake in the global economies and the global financial markets. Yes, it was scary at the start, but 3 months after the economies were shut down, people are realizing a greater fear: starvation and desperation from lack of income and thus lack of food on the table. The negative effects of Covid-19 has been downplayed ("Hey! It's not really fatal for the young and healthy!", "We can always wear a mask at work!", etc.) People on the street needs the economy to be opened. It is a "NEED" and not a "WANT". People needs jobs and income and food on the table. If you are an investor, you have to grab stocks while they are still cheap now. And what is the risk really? The top 5 stocks in the S&P 500 accounts for 20% of the entire S&P and they are all technology stocks!
Technical: You can see my technical analysis on the chart.
Now, the question is: is it still viable to long ES? To be honest, I think it is better to stay out for the time being. Because the up-move has been scary (even for people who were longed the market) and the risk now is really on the long side. But do you want to short into this market? Maybe buy some put options (you have to guard against huge loss in your account in case this thing continues to sprint up). So if I am going to long, I will probably wait for a clear 3-waves correction before I will attempt it and even then, only a small amount.
