First two weeks of 2016 signal a difficult year for investors holding stock. The third week is a big question.
BUY in dip or continued SELL ?
There are three reasons explain for the fall of stock this week:
- China slowdown.
- US corporation profit fell 5% last quarter.
- FED liftoff.
However, I also find two reasons to BUY US equity:
- The divergence between US and the rest of world proves US Equity market is a good place to invest.
- US economy is not in recession.
US Stock market seems ignore all positive data recently such as : Reuter/Michigan Sentiment or payrolls. This week, main data is US CPI , if it is positive, investors should rethink their positions. They can't ignore all good news.
Depend on what reasons market chooses, SPX would follow that reason.
- If SPX breaks the critical support at 1880, next support at 38.2% Fib retracement level is next floor.
- If SPX bounces from the support, we will see BUY in dip.
I choose BUY IN DIP
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