Sforex

IDEA FOR S&p500 NEXT WEEK.

INDEX:SPX   S&P 500 Index
350 8 3
Fundamental Analysis:
- Last week, we witnessed a sharp decline of SP500             , and I predicted very exactly this decline in my post:
IDEA FOR S&P500 NEXT WEEK.


There are lot of reasons why it happened.
+ Withdraw from EM
+ Negative data from China.
+ Profit Taking after setting new high.
The problem is the downtrend is keep going to extend or halt.
This week, SP500             and all Forex pairs having USD will be affected greatly by US economic data. There are lot of reports and events are released, and the volatility would be very high.
I consider key data next week:
- Monday
+ Markit PMI
- Tuesday
+ Durable Good Orders
+ Consumer Confidence
- Wednesday
+ FOMC Minutes
- Thursday
+ GDP report
+ Pending Home Sales
- Friday
+ Personal Spending
+ Personal Income            
There are a lot of important data, and traders must understand what is more important and how market will react after releasing data.
The most important event will be FOMC Minutes on Wednesday, and most analyst s as well as traders expect FED will continue tapering.
I have 4 options on the table now:
- 1 FED taper
- 2 FED no taper
- 3 Positive Economic data
- 4 Negative Economic data.
The combination will be: 1 with 3, 1 with 4, 2 with 3, 2 with 4.
Firstly, trader must choose between two options: Taper or no taper before considering next options and the way market reacts.
In my trading experience, when all people have the same side, I choose the opposite side. Most people choose FED will taper on Wednesday, but I don’t. Obviously, I respect other viewpoint.
I think FED will shift to March and wait for good data to confirm for their decision.
Thus, we just have two options now:
- FED no taper and positive data
- FED no taper and negative data.
Normally, if FED no taper, SP500             soars up and vice versa, but nothing is true in all circumstances, everything could be change, and when the fact changes, we change too. We witness when FED chose taper, SP500             soar up, not decline. The fact here is FED want Stock can stand on its foot despite of taper or no taper. It means US economy has to develop stably and don’t need catalyst from FED. If US economy still needs morphine from FED, FED provides it.
Considering US economic data this week, I believe that GDP report on Thursday will be positive, but I don’t believe Personal Spending and Personal Income             as well as Durable Good Orders are positive.
The mix of data might trigger for Sell off especially if it combines with FED no taper. This is really a catastrophe. Traders should not ignore Risk Aversion. This is the most problem I worry.
-Technical Analysis
Key support at 1810 is pierced. Now the next support level is 1772.87, next weak support is 1753.79 I show on the chart.
I draw on the chart all options, and my strategy is:
- I wait Durable good orders and Consumer confidence on Monday, If those reports are positive, combine with my option is FED no taper, SP500             will test 1810 key resistance level. If those reports are negative, combine with my option is FED no taper, SP500             declines to 1752 level.

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nice colors
Reply
Sforex PRO Technician
2 years ago
thank you
Reply
albertoe
2 years ago
Hi! thanks for your ideas. One question, Why do you think if FED no taper SP will soars up? For my understand, since FED start with the taper, SP had been in range without clear trend.

Thanks in advance
Reply
Sforex PRO albertoe
2 years ago
Economic data don't support for Taper now.

Simply, I try to put myself in FED position, I will not taper, there is still 7 meetings ahead, and a lot of time to give a decision. No rush.

FED no need to do everything they said.



Reply
albertoe Sforex
2 years ago
Yes, I understand this idea, but what I don't understand is why SP will grow in case that FED continue tapering. Can you explain me this? thanks :)
Reply
Sforex PRO albertoe
2 years ago
FED keep monetary policy unchanged --> money is injected regular into Stock market -- > market confidence increase --> Stock soar . QE package created bubble for Equilt market.

I said in this topic:
FED must halt QE3 immediately if not Bubble will break.
Reply
profitmaker999 Sforex
2 years ago
another 10B taper. waiting tomorrow's data.
Reply
Mikke2130.
2 years ago
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.
Reply
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