Just as expected, although with lots of volatility and emotions we are back to square one - 2843 level.
Currently market moves according to a international quarrels. China dose that, US does something else and we swing up an down. In addition there are strong worries on German economy, Brexit, Hong Kong and what seems to be the background theme (incredibly important) yield curves.
Everyone is slapping each other with more tariffs and it's a bit like Charlie Chaplin movie where throwing a cake in the face was considered to be extremely funny. No it's not that funny, especial for retirement accounts and 401k's.
I believe that technically we should be looking at 2825 very closely.
If we break this support then I will be looking at 2728, but It might not go as far and more likely scenario would be to settle somewhere around 2760. This is still a formation of my base scenario of big ass H&S (look at several of my previous post).
At 2728-2760 market will suddenly realize that it was an overreaction. Most likely FED will do another small cut in September, just as a insurance, and most of the investors will find more reasons to be bullish again.
So a strong bounce back to form the right shoulder might be in play.
To understand were my H&S concept is coming form I would need to go into what seems to be a topical end of cycle market trajectory.
1. Economy is getting weaker, but now we just seeing first signs of it. A smal scratches on a surface that are not signs of any recession. There is a huge disconnect between market players. It's based on 1) emotions 2) ego and 3) a time horizon they look at. Some people say resection is coming but they do not say when.
Well it is coming but not just in next 12-18 months.
But exactly now market started to freak out and if you add political events we might see a very strong market decline. This is now and 2728 is a potential bottom or this overreaction.
2. Then some institutions will start to react. FED will start to cut rates to come down the market. Big money will start buying the deep and market might come back to high levels as everyone will be telling the same story:
a) it was overreaction
b) economy is not that bad
c) FED, ECB and almost everyone else is already on it's mission to save the world.
d) etc.
3. And then when we will get back to 29XX levels and just about everyone will already call off the downturn ... it will simply CRUSH, just like it always does.
Noone knows when but we have around 12 months of high volatility.
There is money to be made, but mostly for traders. Investors will find them hard time to make money, as when it drops, they will loose most of that where made between now and THEN.
For now - bearish outlook for next several days.
Trade safe.
Currently market moves according to a international quarrels. China dose that, US does something else and we swing up an down. In addition there are strong worries on German economy, Brexit, Hong Kong and what seems to be the background theme (incredibly important) yield curves.
Everyone is slapping each other with more tariffs and it's a bit like Charlie Chaplin movie where throwing a cake in the face was considered to be extremely funny. No it's not that funny, especial for retirement accounts and 401k's.
I believe that technically we should be looking at 2825 very closely.
If we break this support then I will be looking at 2728, but It might not go as far and more likely scenario would be to settle somewhere around 2760. This is still a formation of my base scenario of big ass H&S (look at several of my previous post).
At 2728-2760 market will suddenly realize that it was an overreaction. Most likely FED will do another small cut in September, just as a insurance, and most of the investors will find more reasons to be bullish again.
So a strong bounce back to form the right shoulder might be in play.
To understand were my H&S concept is coming form I would need to go into what seems to be a topical end of cycle market trajectory.
1. Economy is getting weaker, but now we just seeing first signs of it. A smal scratches on a surface that are not signs of any recession. There is a huge disconnect between market players. It's based on 1) emotions 2) ego and 3) a time horizon they look at. Some people say resection is coming but they do not say when.
Well it is coming but not just in next 12-18 months.
But exactly now market started to freak out and if you add political events we might see a very strong market decline. This is now and 2728 is a potential bottom or this overreaction.
2. Then some institutions will start to react. FED will start to cut rates to come down the market. Big money will start buying the deep and market might come back to high levels as everyone will be telling the same story:
a) it was overreaction
b) economy is not that bad
c) FED, ECB and almost everyone else is already on it's mission to save the world.
d) etc.
3. And then when we will get back to 29XX levels and just about everyone will already call off the downturn ... it will simply CRUSH, just like it always does.
Noone knows when but we have around 12 months of high volatility.
There is money to be made, but mostly for traders. Investors will find them hard time to make money, as when it drops, they will loose most of that where made between now and THEN.
For now - bearish outlook for next several days.
Trade safe.
Renegotiation of trade deal Everyone is euphoric again.
Let's see how high it will help.