Technician

SP500: Approaching Bubble Territory?? Part 2

INDEX:SPX   S&P 500 Index
1506 21 13
In my previous post (https://www.tradingview.com/v/bplrXyXD/), I emphasized on how FED's easy policy has created no other place for money to go but equities, as this pump of liquidity triggered a speculative bubble in asset prices, in this case bonds and stocks, as big institutions used this money to capitalize on an easy FED.

I also mentioned that this easy money will probably continue for the short term(months), as economic conditions have weakened recently, while the FED is in a transitional phase. And that would support markets for the short coming period. However, the FED will eventually start to withdraw, for one of two reasons, either economic conditions stabilize, or forced by financial instability concerns(expanding the bubble in bonds further). In both cases, yields will spike, and this speculative cycle will reverse.

Some would argue that historically, markets aren't over-valued, prices are at normal levels. According to goldman sachs research, four valuation methods suggest the S&P500             is overvalued at current levels.

Technically speaking, I plotted a 36-month long term simple moving average envelopes , a simple moving average with two averages above or below by 25 percent.The average tended to confine price most of the time, while in some cases, extreme swings towards the upper and lower bands occurs, which indicates excessive bullishness or bearishness, resulting from unusual market conditions driven by bubbles in certain areas in the economy,

I am not saying that we shouldn't participate and gain from these bullish trends, but common sense suggests that there is no real rational reason behind this rally but the excess of liquidity, so watch out and Keep Safe :).

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i HERE A LOT OF INVESTOR AND TRADERS SAY THIS IS A MINOR SELL-OFF AND I WANT TO TELL ALL OF YOU THERE WRONG. THE MAJOR SELL OFF HAS ALREADY BEGUN. THE S&P 500 HAS ALREADY FORMED A PERFECT MONTHLY WOLFE WAVE PATTERN WHICH IS IN STAGE 5 EXTREME, WHILE MOMENTUM HAS ALREADY TURN DOWNWARD. THE MARKET WILL NOT ADVANCE SIGNIFICANTLY ANY FURTHER. THE DECLINE WILL DROP TO THE 700 TO 600 AREA. SO ANY ONE HOLDING STOCKS OR INDEXES FOR THE LONG HAUL ARE GOING TO LOOSE GREATLY. CHECK OUT THE WOLFE WAVE PATTERN.
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Good saying
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ForextikMine lawrencedai
hi , i m new here.
i was looking for some spx500 outlook and i arrived here:) do someone of you use price action strategy on daily charts? i entered 2 days ago on the shooting star candlestick. there was a nice psicological supporto at 1.800. now i m waiting....which are your new outlook after the last fomc minutes?
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Note that the Tech Bubble continued for 3 years at the upper 25% boundary before crashing. There probably will be a correction back to 1500-1600 range but I agree with BEI that we've just exited the Secular Bear Market and there's a lot of upside still left in this bull market.
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Technician TOP josephmeth
First thing, You've just said its was a bubble. Second, a correction from 1800 to 1600 would be 11%( big correction), am looking for more than that thought. Third, secular bull markets could have reactions of major magnitude, 2008 crash corrected more than 50 percent of 1980-2008 secular bull market.
One more thing, the boundaries argument is a part of the overall proposed idea, it would be meaningless if separated from that context.
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Thanks for your presentatio, but I am not sure that the FED is the autor of equities growth. It is real that USA do not stop of print money and the only refuge that someone has at hands are the equities. Are you in line with this?
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If understood you correctly.Yeah, that's exactly what I wanted to say :).
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great read , and with the holidays around the corner there should be some pull back, soon
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Thanks all for the discussion. I've reached similar conclusions and lean toward the short side as well. I don't see any Armageddon, but do see a significant pullback coming.
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I do not agree, technically, this still looks bullish, 2400 first target and after 5000.
snapshot
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