YaKa

SP500 Update 12hours after FED

FX:SPX500   S&P 500 index of US listed shares
231 14 9

I tried to find reasons to justify this move up - I can't get it fundamentally.

My conclusion is that the market was positioned for a "patience" removal but no accommodating language and the move we have seen is probably a squeeze reversal.

The technical picture did not change:
- SP500             is still in the upper band with limited upside and shall find its way down through 2020 in the next few weeks.
- The upside is limited to some 3% vertically and 1% per month therafter.
- For the moment: let's call it a slow cooking barbecue.

Note Though:
While the drift persists, the oscillations required to maintain the altitude are increasing in amplitude.
This increasing agitation is a sign of weakness but interestingly it gives the impression the market is still in strong bull posture when it posts a 45pts hourly move like yesterday.
Let me express my view simply:
Now 2100, where are the next 100pts? 2200 or 2000.
My view: 2000 FIRST
+1 Reply
then I will take 2200 :D
Reply
YaKa PRO SPYderCrusher
I know:)
Let's keep that bet on.
+1 Reply
YaKa PRO SPYderCrusher
My view for the next 12 months:
- very boring.
- If i am right there is a correction and a rally back to marginal top.
- Except for the next 5months with some action down and up... It could be just rangy otherwise.
snapshot
+2 Reply
From trend to range... a trading environment in other words.
Reply
That is a very fair assessment. Really, my betting on more upside is just saying "more of the same". If I am wrong, then rangebound (still would argue with bullish tilt) is likely. I dont yet see the catalyst for a huge meltdown, but of course, as time goes on will assess new data that can shape that view (ie maybe huge systemic event in Eurozone? WWIII? etc)

Some things (trying to be objective here) seem very bullish. For instance, given how much float reduction there has been in the last few yrs due to corporate buybacks, any marginal demand is bullish since reduced supply. Where will the marginal demand come from?

My guess....more of the same.

Since rates in US are still high when measured globally, even though rate trade is long in the tooth by many measures, what does a Fixed Income shop or even a staid pension do when large cap dividend stocks have high yields, many stocks are benefitting from low cost of cap and easy ability to restructure balance sheets (with the accounting effect of making the ratio look good), US 10 yr yield is ~2% and german bunds are ... what is it like 10 bps? (I didn't check but much less than US yields). Point is, every one is a source of incremental equity demand. (all per this theory, of course)

So that can drive more equity buying / rates coming down, both should be bullish for equities. The strong dollar I treat like a backdoor rate raise and even that hasnt thrown the market off.

Sorry for the long replies. Of course these are just viewpoints, and certainly there is valid data to support a slightly bear or more bearish case.

Very much enjoy your viewpoints though and appreciate your perspective. Big fan of your charts in general too.


but I think the chances of the market developing into a range (and thus tagging 1900s) are actually pretty high.
Reply
SPYderCrusher PRO SPYderCrusher
this part of my comment

"but I think the chances of the market developing into a range (and thus tagging 1900s) are actually pretty high."

I meant to put at the top, if the uptrend afterall doesnt continue unabated
Reply
YaKa PRO SPYderCrusher
One thing I observed:
Perfection rarely occurs.
So far the cone from Mar09 is intact.
Expecting for the rally to carry on in low vol in the cone is expecting perfection
snapshot
+1 Reply
"- For the moment: let's call it a slow cooking barbecue. "

I like it

I am still bullish on equities, also like the IWM specifically bc low oil exposure, limited large cap and thus less FX exposure, and been saying think it plays catchup on last years underperformance (SPY / QQQ up 14% / 20% respectively, IWM up only 4%)
+2 Reply
YaKa PRO SPYderCrusher
Hi, Yeah clearly you got it right so far.

Not without risk: although you have a drift, you bear heavy downside risk... and even if you are always long there are period where it was better to get out when we got close to the band so you could buy ~5% lower. We are back to those levels.

I think it becomes difficult for any value fund to find value and the reasons why IWM is lagging may be rational.

I am not comfortable being long and that has been true for a while and it keeps coming back.

There is no right or wrong. Actually it was possible for both longs and shorts to make money in the last 6months.

Just a question of money management and selection of entry exit.

NOW:
- With fresh money, at this level, in this config, with a 2 months time horizon, LONG OR SHORT?
- Definitely SHORT!
+2 Reply
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