Over the last few weeks, we’ve seen a correction due to several reasons:
* a tweet that more tariffs would hit China,
* a tweet that restrictions would return on Huawei,
* oversold market conditions
* and technically extreme extension of the market above the 200-dma.
We have laso seen a few rebounds on:
* a tweet of a september trade deal,
* news that the Huawei ban would only apply to Federal agencies
So we can mostly assume that we have a "tweets driven market", and that signals trouble.
While investors are betting stronger and stronger on more Fed rate cuts, no one seems to look at what is happening with earnings which continue to erode.
If you compare earnings estimates estimates from few months back and current once it seems like analysts are slowly backing off their optimism.
Numbers are wiping out the benefits of tax cuts and things start to slowly go in a wrong direction.
Technically we are still above a important support levels:
1) ~2900 support line
2) 2913 - fibo 61,8.
This week I will be looking at those levels very closely.
My view is still bearish.
While there is a 35% change for a further yet rather emotional rally on a good news (or tweets) I would treat them as "sellable rallies" if you are long.
I attribute 65% chance to further downside move especially looking at the broader perspective of building a H&S pattern.
At this stage of the market the most important thing is to remember about risk management:
1) Trim winning positions to original portfolio weights.
2) Sell what is not working - otherwise it will bite your ass.
3) Set Stop Losses higher - Risk happens fast.
4) Review your portfolio allocation and compare it to your risk profile.
Have a Wonder trading this week.
I will be looking for some short opportunities soon, 2728 is coming sooner then you think.
* a tweet that more tariffs would hit China,
* a tweet that restrictions would return on Huawei,
* oversold market conditions
* and technically extreme extension of the market above the 200-dma.
We have laso seen a few rebounds on:
* a tweet of a september trade deal,
* news that the Huawei ban would only apply to Federal agencies
So we can mostly assume that we have a "tweets driven market", and that signals trouble.
While investors are betting stronger and stronger on more Fed rate cuts, no one seems to look at what is happening with earnings which continue to erode.
If you compare earnings estimates estimates from few months back and current once it seems like analysts are slowly backing off their optimism.
Numbers are wiping out the benefits of tax cuts and things start to slowly go in a wrong direction.
Technically we are still above a important support levels:
1) ~2900 support line
2) 2913 - fibo 61,8.
This week I will be looking at those levels very closely.
My view is still bearish.
While there is a 35% change for a further yet rather emotional rally on a good news (or tweets) I would treat them as "sellable rallies" if you are long.
I attribute 65% chance to further downside move especially looking at the broader perspective of building a H&S pattern.
At this stage of the market the most important thing is to remember about risk management:
1) Trim winning positions to original portfolio weights.
2) Sell what is not working - otherwise it will bite your ass.
3) Set Stop Losses higher - Risk happens fast.
4) Review your portfolio allocation and compare it to your risk profile.
Have a Wonder trading this week.
I will be looking for some short opportunities soon, 2728 is coming sooner then you think.