After few days of swing dancing we are back again we are back just above 38,2% fibo.
Markets moves according to news and most of the participants seems to be very confused.
Mr. P’s tweets lost its power yesterday and market focused at more fundamental important data like state of economy, yields and earning reports.
And here is a puzzle. Some of them flash warning signs, some are positive and some in line with expectations. How should be make sense of them all?
I would advise to look at those from a broader perspective.
- As it usually happens that late in a cycle, some companies ER is already bad and some report positive results, but it is worth to notice what is considered to be POSITIVE these days. In line or better then analyst expected? Did you notice that most of analyst were slowly adjusting downward their expectations for last 6 moths? So at the beginning of the year they expected 100, then revised to 90, then 80, then 75, and now company reports 78. Is that positive?
Bottom line is that most of the results reported by companies are already slowing down or even falling down.
- We are late in a cycle, so it is quite usual that macroeconomic data deteriorates slowly and gradually. It doesn't work like traffic lights that tell us - Recession/No Recession. All of those indicators are slowly giving us singes to be more and more careful. There is a lot of indicators that are just fine and do not signal any kind of a trouble but looking more broadly at all of them, their trends and signaling might give you a clear picture, that this engine needs a scheduled repair with next few hundred mile. Does not mean it will break, but likelihood of a breakdown is much bigger now.
So in general for a long term (12 month) the market does not look perfect. I see no reason for it to grow. I still believe H&S might be building up, and that means we can see 2950 this year.
Short term (2 weeks) I would expect a further move down.
But today I would like to see a recovery run (80% probability). It might go up to 2890-2900 just to blow of some steam and make bulls more comfortable, but more likely it will reach 2880.
Unless there is more bad news and market decides to fall again (10% probability)
Trade safe.
Markets moves according to news and most of the participants seems to be very confused.
Mr. P’s tweets lost its power yesterday and market focused at more fundamental important data like state of economy, yields and earning reports.
And here is a puzzle. Some of them flash warning signs, some are positive and some in line with expectations. How should be make sense of them all?
I would advise to look at those from a broader perspective.
- As it usually happens that late in a cycle, some companies ER is already bad and some report positive results, but it is worth to notice what is considered to be POSITIVE these days. In line or better then analyst expected? Did you notice that most of analyst were slowly adjusting downward their expectations for last 6 moths? So at the beginning of the year they expected 100, then revised to 90, then 80, then 75, and now company reports 78. Is that positive?
Bottom line is that most of the results reported by companies are already slowing down or even falling down.
- We are late in a cycle, so it is quite usual that macroeconomic data deteriorates slowly and gradually. It doesn't work like traffic lights that tell us - Recession/No Recession. All of those indicators are slowly giving us singes to be more and more careful. There is a lot of indicators that are just fine and do not signal any kind of a trouble but looking more broadly at all of them, their trends and signaling might give you a clear picture, that this engine needs a scheduled repair with next few hundred mile. Does not mean it will break, but likelihood of a breakdown is much bigger now.
So in general for a long term (12 month) the market does not look perfect. I see no reason for it to grow. I still believe H&S might be building up, and that means we can see 2950 this year.
Short term (2 weeks) I would expect a further move down.
But today I would like to see a recovery run (80% probability). It might go up to 2890-2900 just to blow of some steam and make bulls more comfortable, but more likely it will reach 2880.
Unless there is more bad news and market decides to fall again (10% probability)
Trade safe.
