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20200328 ~ 20200403 The data is terrible, but the market is very

SPCFD:SPX   S&P 500 Index
The epidemic situation of COVID-19 continued to expand and the measures to combat the virus of various countries continued to increase, and the economy froze. The number of initial jobless claims in the US that has been announced on 4/2 has exploded to 6.648 million from 3.283 million last week. The rate of deterioration of unemployment data in the US for two consecutive weeks has continuously surpassed market and government expectations. The NFP data released on Friday decreased by 701 K people, also far below expectations. The leading indicators performed better than expected. Manufacturing ISM fell from 50.1 to 49.1; non-manufacturing ISM fell from 57.3 to 52.5. Compared to deteriorating economic data, market performance is relatively calm. SPX500 fluctuated within 8% range throughout the week and was not significantly affected by bad data. However, it is still too early to conclude that the stock market has digested all bad data and would turn up soon. Although employment data is generally regarded as a lagging indicator since employment data will fall behind economic activity because normal enterprise recruitment or layoffs would be determined by future expectations based on current economic conditions. However, the outbreak of this epidemic occurred suddenly, and economic activities were suddenly stopped, so firms are also confronted with a sharp contradiction that requires layoffs.
We believe that the employment data this week is likely to lead the ISM based on enterprise surveys, so the outlook for the economy or the stock market is still relatively pessimistic. Technically, although the SP500 index is slightly supported near 2450, it still faces pressure from the 20 EMA line above. It should also be noted that the 120 EMA and 240 EMA lines are about to cross. There will be some bear later. The idea of US stocks remains bearish .
As the interest rate market, the interest rate has reflected a weak economic trend and dropped along with the moving average, but the decline was not too large. Over the past week, the 10-year U.S. Treasury yield has fallen by about 13.16 bps , and the price action was slight in terms of the extent of economic data. Technically, the interest rate has downside support. Possibly because the Fed does not intend to implement a negative interest rate, and at the same time the market anticipates the government will issue a large amount of bonds to counter the economic shock caused by the epidemic. The current idea of the interest rate market is relatively neutral, but the interest rate curve is expected toward steepness.
In terms of oil prices, on Friday, Trump released news that Saudi Arabia and Russia may restart talks on production cuts and encouraged oil prices to rise sharply. Although Russia denied later, there is still news that Russian firms may cooperate. At present, the two countries have not reached an agreement yet, so there is still no certainty whether production will actually be reduced. However, from a technical point of view, the weekly MACD and daily MACD histograms of oil prices are positive slopes, which is a good bullish signal. With the current market may consider 20 as a short-term low, it will be bullish for oil prices. However, we must pay attention to the impact of possibly fail on production cut and weak economic activity on oil prices. The overall rebound may not be that fast.

Comments

20200407 Oops, was humiliated by the market which is very optimistic
Sunday's bearish expectations were missed, and I still seem to underestimate the degree of market optimism and the power of the mean reversion. Regarding the epidemic, market confidence was enhanced by the decline rate of growth of new cases in Europe and the United States, and the House of Representatives is planning to provide another trillion US dollars of stimulating package; the market is also highly anticipated to the oil country meeting on Thursday. Although last week ’s employment data was worse than expected, it is clear that the market ’s reaction over the past two days has been to choose to ignore the bad news but amplify the good news. Technically, the stock market has firmly stood above 20 EMA and surged for two days, the U.S. Treasury yield has risen, and the US dollar has fallen, all of which indicate that market risk sentiment is very risk-on. In addition, the weekly MACD histogram has turned to a positive slope and signaling no short positions are allowed. In a short period of time, it is not ruled out that there is a possibility that the short-term price may climb to test 60 EMA, but the 60 EMA is a stronger resist, and the more good news is needed to maintain the bull. Otherwise, according to the experience of the past bear market, if it does not stand firmly above the 60 EMA, another wave of decline may begin. The bears must be patient.
In addition, the stupid thing I did today was to close the SPX500 short orders too late but instead close the USDCNH short orders too early. The blame is still on the psychological factors of reluctance to accept the mistake and stop-loss, still need to reduce this kind of mistake!
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