Why is the S&P500 ready to go short again?
This question can't be answer, I'm not a magician and no one will know what the market is going to do, but let's see what's giving me the hint of the short idea.
Let's start from the Real GDP.
We're going to consider the Real GDP which I'll be calling GDP during the post.
After doing some research you can see how the S&P is directly correlated with the GDP, and that the GDP is directly correlated with the S&P, if one goes down in most cases the other one goes down and vice versa. If we lag the GDP by 6 months, we can see how over 80% of the times if the GDP goes in a direction, within 6 months will be followed by the S&P.
There is only one scenario where we're not interested into trading, which is the ones where the GDP goes down and the S&P goes up. This is the most important rule in analyzing the market.
If we want to see how the S&P is going to move than we have to predict the GDP, how can we predict the GDP?
By looking at the Macroeconomics and Microeconomics data.
In this post I'll only take into consideration the US Yield Curve otherwise the post is going to be too long and y'all lazy people won't read it. According to Investopedia, the yield curve graphs the relationship between bond yields and bond maturity. More specifically, the yield curve captures the perceived risks of bonds with various maturities to bond investors.
The U.S. Treasury Department issues bonds with maturities ranging from one month to 30 years. As bonds with longer maturities usually carry higher risk, such bonds have higher yields than do bonds with shorter maturities. Due to this, a normal yield curve reflects increasing bond yields as maturity increases.
However, the yield curve can sometimes become flat or inverted. In a flat yield curve, short-term bonds have approximately the same yield as long-term bonds. An inverted yield curve reflects decreasing bond yields as maturity increases. Such yield curves are harbingers of an economic recession.
The S&P is also in a bear market since it's lost the 20% from its highest point and once our fundamental analysis is done, we can move on the technical part, it's not useless but can give us a good timing.
Here in the chart, you can see the first cup and the second cup which are giving us the first hint of a continuation in down trend. Obviously, we need more confirmations but that's a first suggestion of what's going to happen.
I know it's a short and quick post, but I'll update this or create a new post once I understand how the ideas section of TradingView works :)
Good luck traders!
This question can't be answer, I'm not a magician and no one will know what the market is going to do, but let's see what's giving me the hint of the short idea.
Let's start from the Real GDP.
We're going to consider the Real GDP which I'll be calling GDP during the post.
After doing some research you can see how the S&P is directly correlated with the GDP, and that the GDP is directly correlated with the S&P, if one goes down in most cases the other one goes down and vice versa. If we lag the GDP by 6 months, we can see how over 80% of the times if the GDP goes in a direction, within 6 months will be followed by the S&P.
There is only one scenario where we're not interested into trading, which is the ones where the GDP goes down and the S&P goes up. This is the most important rule in analyzing the market.
If we want to see how the S&P is going to move than we have to predict the GDP, how can we predict the GDP?
By looking at the Macroeconomics and Microeconomics data.
In this post I'll only take into consideration the US Yield Curve otherwise the post is going to be too long and y'all lazy people won't read it. According to Investopedia, the yield curve graphs the relationship between bond yields and bond maturity. More specifically, the yield curve captures the perceived risks of bonds with various maturities to bond investors.
The U.S. Treasury Department issues bonds with maturities ranging from one month to 30 years. As bonds with longer maturities usually carry higher risk, such bonds have higher yields than do bonds with shorter maturities. Due to this, a normal yield curve reflects increasing bond yields as maturity increases.
However, the yield curve can sometimes become flat or inverted. In a flat yield curve, short-term bonds have approximately the same yield as long-term bonds. An inverted yield curve reflects decreasing bond yields as maturity increases. Such yield curves are harbingers of an economic recession.
The S&P is also in a bear market since it's lost the 20% from its highest point and once our fundamental analysis is done, we can move on the technical part, it's not useless but can give us a good timing.
Here in the chart, you can see the first cup and the second cup which are giving us the first hint of a continuation in down trend. Obviously, we need more confirmations but that's a first suggestion of what's going to happen.
I know it's a short and quick post, but I'll update this or create a new post once I understand how the ideas section of TradingView works :)
Good luck traders!
Comment:
As predicted yesterday, the market started going back to its last low.