We are looking here again at the S&P 500 Index (SPX), let's mix the message we get from this chart in relation to the US Elections.
First, feel free to hit LIKE to get started...
Now, the chart technicals.
We have a bearish SPX chart with prices closing below EMA50 for the first time since May, we saw a fake breakdown of this level as prices quickly moved back up and resumed growing.
Now we have strong bearish volume coming in with indicators trending down/red/more bearishness... But we've seen this pattern before.
Each time the SPX hits a new peak, prices drop to the 0.236 Fib. retracement support level. As soon as this level is hit, the bullish action is resumed.
This same level is about to be hit next week... will the bullish action resume this time as well?
We are having bearish signals but is possible to see a reversal at this level... Marked on the chart as "potential rebound support"... but why?
What about the US Elections?
Here is the scenario...
A bullish SPX is good for the incumbent party, the sitting president, according to past history.
A bearish SPX ("stock market") is bad for the sitting president.
If Donald Trump is to win, we are likely to see the SPX continue growing to see a real crash take place just right after the elections. (green)
But if Donald Trump is to lose, we should be seeing the SPX go straight red... (red)
Times are different though, things can always change.
As for the SPX chart by itself, we are looking at strong bearish signals developing... To me, it reads lower prices but signals are not all...
Conditions for change Starting the week and moving back above EMA50 would signal that the green scenario is most likely... But staying below this level can lead to even lower prices fast.
I think Trump will win... If that's the case, then the SPX should go up but the signals here are telling me that this index is ready to drop.
Is Trump going to lose then?
Can we really predict the outcome of the SPX or the elections in such turbulent times?
What's your take?
Please share it with us in the comments section below.
I'm confused - under the last 4 republican presidents we've seen minimal growth in the stock market from start to finish. Under both Obama and Clinton we saw close to +200% gains in the S&P 500. Wouldn't historical data suggest if Biden wins we see a rise in the stock market?
Earthmatrix
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@InsideCrypto, That is often due to recless spending and the GOP having to pick up the mess. It is just like those talking UBI. UBI would cause a huge boom in the economy and then a MASSIVE collapse never seen before. The bottom line is that the DNC has ZERO understanding for economics. Economics is just political to them since JFK.
InsideCrypto
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@Earthmatrix, ok so can you explain why Trump claimed all credit for the stock market going up less than one year into his presidency? If the economy is decided based no prior administrations (in your view) shouldn't any progress made 1-2 years into a presidency be because of the prior admin?
Earthmatrix
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@InsideCrypto, Because his policies, less taxes, less regulation, pressure on China, incentives to keep bus. in the US all boosted the economy from a fundamental perspective and not just by juicing the system. Obama literally said that we will never see the GDP grow rapidly ever again and that we should get used to poor growth. Clinton did some good things, but Obama was a disaster. The DNC sees economics as political these days. They do not care what works, or what is best for the nation, only what feeds into the political religious view and keeps them in power. This is not just in the USA, but World wide. This is why we are seen the collapse of ALL socialist systems around the world and the rise in totalitarianism to hide their failures and to stay in power. They will fail however, it is just like the weather, you cannot stop winter from coming no matter how strong your politics.
cryptosince1963
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I feel like Trump is probably going to stay in. That said I feel, as you say, there's a drop coming eventually. The writing is on the wall all over the markets and once things come back to reality and the money stops pouring in it's going to be an abrupt shift downward.
I like to dream that these moments of market uncertainty in the "contemporary" markets will drive people to crypto instead. One day we'll see the stocks plummet and BTC and everything else go parabolic and we'll all know the chains have broken. The sentiment has certainly been there. But still seems to be a pipe dream.
AlanSantana
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@reggiogeorge, It could have been the plan from the beginning and maybe not just a dream... The sentiment has been there as you say.
cryptosince1963
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@alanmasters, I honestly thought this pandemic would be the external catalyst for the turn. Many countries being pushed to the breaking point and showing cracks in the systems that have been there for decades. What else could decentralized currency ask for?
But with the crypto market still mirroring the stock market I once again question whether it's just become another chair in the game. Time will tell us all. I hope we've all got a few more moon rides left in us ;)
AlanSantana
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@reggiogeorge, Well said.
I don't think crypto will become another chair... It has its own arena.
cryptosince1963
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@alanmasters, Indeed, you're probably correct. Might all be a natural step in the evolution of a currency from digital dream to the mainstream.
Spellbound
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I think regardless of who wins, the other side is not going admit defeat which means extended uncertainty. In that case, risk-off will most likely be the play.