So yesterday move confirms a melt-up with target price around 3400-3500:
- Volume has peaked since lows of March, signaling FOMO from investors.
- Technical indicators are stretched (RSI).
- Volatility trending down.
- Fear and greed index indicates greed.
- Momentum and news flow is very positive and will probably keep like that until the beginning of July.
So if you are in the market wait until that level to take some profits.
If you are not in the market wait for a pull back to enter. Maybe in July there could be some reality check after q2 results. Financials could be the canary in the coal mine if defaults rise a lot. Don't think we can go lower than 2800 as at that point FED would start jawboning with more "stimulus" (aka inflation in financial assets).
I expect aroud 3600 at least for presidential elections.
Long term my view continues to be bearish after elections, as I expect:
- Salaries to go down as business will try to cut costs.
- as a result, less comsuption and lots of small businesses closing or struggling to make a profit.
- therefore lots of loans will default in the coming months, both from consumer and retail business sectors.
- unemployment will stay at 8-10%. This could trigger more defaults of mortgages.
- as a result big companies in SP 500 will sell less products and services (think Google or Facebook whose revenue depends on advertising mostly from retail or small business owners).
This would cause more deflation which in turn would cause stocks to go down. Maybe then we get helicopter money or government expending in infrastructure in order to create jobs and inflate again the economy and start a new bull market based on more solid fundamentals that just pure asset inflation.
So long (though very nimble) short and medium term, bearish long term.
- Volume has peaked since lows of March, signaling FOMO from investors.
- Technical indicators are stretched (RSI).
- Volatility trending down.
- Fear and greed index indicates greed.
- Momentum and news flow is very positive and will probably keep like that until the beginning of July.
So if you are in the market wait until that level to take some profits.
If you are not in the market wait for a pull back to enter. Maybe in July there could be some reality check after q2 results. Financials could be the canary in the coal mine if defaults rise a lot. Don't think we can go lower than 2800 as at that point FED would start jawboning with more "stimulus" (aka inflation in financial assets).
I expect aroud 3600 at least for presidential elections.
Long term my view continues to be bearish after elections, as I expect:
- Salaries to go down as business will try to cut costs.
- as a result, less comsuption and lots of small businesses closing or struggling to make a profit.
- therefore lots of loans will default in the coming months, both from consumer and retail business sectors.
- unemployment will stay at 8-10%. This could trigger more defaults of mortgages.
- as a result big companies in SP 500 will sell less products and services (think Google or Facebook whose revenue depends on advertising mostly from retail or small business owners).
This would cause more deflation which in turn would cause stocks to go down. Maybe then we get helicopter money or government expending in infrastructure in order to create jobs and inflate again the economy and start a new bull market based on more solid fundamentals that just pure asset inflation.
So long (though very nimble) short and medium term, bearish long term.