This move today was very strong. Price is back to 2124 previous breakout point, a level not seen since 11/July!
All the action was triggered by selloff in bonds. Especially in European periferia bonds, after Draghi did not announced more free lunch gift.
Now we have a very good question. What would markets do without more global monetary stimulus, without the always dovish central banks? Other question is: do central banks lose control? I mean just immagine what an unexpected September rate hike by FED would trigger? Does it mean they can never hike rates again? Of course not. They will, but very slowly and very late, keeping very deep negative real rates for very long time.
Actually there is truth in "TINA". The only trick is you have to be selective what and when you buy. For more than half a year now my view is that the whole world is running into a stagflation in next 2 years. Then probably next level of solution will be fiscal stimulus to stimulate growth, which in case picks up finally, of course will trigger a very high level of . But again, central banks will be well behind the curves.
How it will play out in equities I don't really know now. I have more clue what to do on bond mkts in the long run.
Back to SPX:
I don't know how deep this selling will go. What I know is that Price is below Kijun, and that is blowing up. That is the answer why 99 % of people feel today it was an armageddon. No, it was not! setup is just back to neutral...well, OK, it turned very quickly back to neutral. When you get used to 7-14 points for 5-6 weeks, a sudden move of 50+ points looks horrifying.
is something we always have to deal with, and as it is always changing, this must be one of our basic ingredients for the position sizing method!
By the way, that's why I love low periods! With low ATR you can open lot larger notional positions.
Next supp/res levels on daily are very simple: 2123 / 2090-2100 / 2025-40.... I don't want to continue now :-)
- , but looking at haDelta, it is extremely oversold. We will have minimum some consolidation above 2120. I hope we will even have a pull back, as 4H retracement level where we have to look for sell signal is 2150-2160 now.
Hope you enjoyed todays ride as much as I did. Patience, hard work and discipline pays!
Have a lovely week end!
No one can predict tomorrow, but I do think this is healthy correction within what does overall look like an impulsive move upwards, that is to be continued. Central Bank's power is underrated in my opinion. Corrections are healthy for an expanding economy, but the form of an bearish structure on a bigger timeframe will simply just not be accepted by the FEDs. People think they've run out of steam, I don't think so.