Despite our insistence on SPX moving to 3 500$ and 3 400$, it remains choppy between 3 700$ and 4 000$. With that in mind, we still have not changed our view and stay bearish on the index. We believe the market has not bottomed out yet, and there is much more downside in the future. Our thesis is based on the fact that the FED will continue to tighten monetary conditions, which will further weaken the U.S. economy. In addition to that, we are noticing sings of exhaustion in the futures market.
Illustration 1.01 Illustration 1.01 shows the trend in volume for the past few trading sessions. The recent decline with the price going up is bearish; therefore, we are very cautious.
Technical analysis - daily time frame MACD is bullish; we will pay close attention to whether it can hold above 0 points; if not, it will be very bearish. RSI and Stochastic are bullish. DM+ and DM- are bullish as well. Overall, the daily time frame is bullish.
Technical analysis - weekly time frame RSI and MACD are neutral. Stochastic is slightly bullish. DM+ and DM- are bearish. Overall, the weekly time frame is neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Great analysis! I wrote this in one of my recent updates: "Bear markets have not bottomed before a recession begins. Bear markets have not bottomed with central banks still tightening policy. Even if the rate hikes by the US Fed slow or decrease in size, they are still rate *hikes,* not rate cuts. Rate hikes, even if less drastic, reflect rising rates, and rising rates cannot be called a pivot. Pivot occurs when the Fed starts cutting rates. This is why the bear market is not over *even if* SPX rallies further."
RobBiddle
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@SquishTrade, That's certainly logical and I essentially agree. The problem though is that speculative bulls don't want to wait for the Fed to cut rates because that will be too obvious, so they view any shift to less hawkish (e.g. slower pace of hikes) as a sign that things are turning (i.e. a Pivot in policy) and they want to get ahead of the curve before the next bull run. I personally think most of them are going to be catching falling knives like crazy, but I also think the market will turn bullish well before an actual rate cut, likely whenever the Fed announces a de facto end to hikes but before the first cut IMHO.
That's so funny man, we have our 4 price alerts setup exactly the same! haha! Thanks for info. I think this top will be hard to time, but we know the end is inevitable.
Tradersweekly
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@ImminentDebacle, That happens! We agree with you. Thank you for the comment.
AngelaCat
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Thanks for posting such a clear viewed article on time. US Retails sales came in strong as we expected. However I expect the USD in short-term to recover from some of the recent losses. But a strong US economy also gives the Fed room for more monetary tightening. Market did do well last days, the stronger than expected retail sales are of course good news, but are currently seen mixed as it increases the expectations of more rate hikes, yes, even it is as unreasonable as it really is, but we shall also remember that the Fed has repeatedly said that the US economy is strong enough to withstand tighter monetary policy. so such a slightly stronger USD plus the increased rate hike expectations could weigh on the growth/tech sector.