The exchange rate is currently in the correction phase. We expect a further 10% downward movement from the current level. However, in the longer term, a repeat increase is expected. Initially with stronger volatility. The exchange rate correction level may be around 2560usd. In practice, we expect this second test. If the theory is correct, assuming an initial higher volatility, a multi-month sustained increase is assumed. Up to 54% of the 2560usd correction level is used to select our long-term target price.
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The SPX500 would have to cut 2.87% from the current level and start taking long positions.
The important point arising from all this is that, different methods can achieve the same objectives. No one trading methodology is right. It's mainly about discipline and individual trader psychology. You - the trader - is what makes it right. It's about different ways of reaching the same endpoints. There is no one path to the promised land but there is one final obstacle. As Akil Stokes once said in a video a couple years ago, "The problem is you". [Not referring to my friend meszaros]
Captain_Walker
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The overall macroeconomic picture is an erosion of the base of the S&P500, with 50% of stocks falling 20 to 50% from their all time highs. That's a big chunk - not to be ignored. The causes of this are multifactorial and widely available from reputable sources. This is a significant turn. Recently >1000 stocks on the NYSE have hit 52-week lows, with only 0.2% establishing new highs. So there all this spells big trouble. Of course, if Mr Trump and the Fed work some miracle, then the moon could be the next target.
The problem for the S&P500 is not just what's on home soil. The S&P is part of a big global network of stock markets which influence each other. Emerging markets have been hammered, dragging US-based stocks south. The MSCI-ACWI index is a sound reference point for that.
Then there is the problem of US National Debt at $22 Trillon and peaking at an unprecedented 105% of GDP. Global debt affecting world economies is approximately $250 Trillion. Whilst some may wish for a micacles - which is fine - miracles are actually rare. The Fed could certainly print loadsah money, but for obvious reasons that's no solution. They've been 'printing' like crazy since the 1970s (unrestrained by absense of the gold-standard). Interest rates have been kept at ridiculously low rates for the last 10 years, which is how the whole mess came about. So really, the miracle would be like wishing away US and global debt. There is a thing called 'reality' and it's a very hard place (not that anyone suggested otherwise).
I therefore see no sound evidence anywhere for a 'theory' - or assumption - that would lead to an expectation of a huge bounce off 2560, in the projected time frame. But a bounce off 2560 would be expected because it is a key support area. Just to be clear, I am not a fundamental analyst (or even a financial analyst). I'm a 'common sense' analyst. :)) And common sense built on hard evidence, says that something cannot be created out of nothing, except in fiction. The S&P has been largely built on 'air' (aka debt, as per leverage).
The trouble with evidence is several fold:
1. It can be ignored.
2. Minimised.
3. Considered as fake news.
4. Its bearer labelled so as to make it insignificant etc.
5. It is easily replaced by hopes and dreams.
On two main fronts the S&P500 is in deep trouble:
1. The technical picture is a down trend on weekly to 6H timeframes. [By the time a full Daily trend for the south emerges, it will be too risky to short for most people without millions in their accounts].
2.Globally acroeconomic and geopolitical tensions are rising. The IMF has issued warnings on the impact.
What's likely to push the S&P north? Nothing I can find, of any substance. Of course, collective greed and hope could well do the job. :)
meszaros
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@Captain_Walker, Firstly, thank you very much for this very good comment that would be in any financial newspaper. Second, "I am a" common sense "analyst." This is far more effective than any indicator analysis system. Especially because your argumentation and descriptions are interesting and remarkable. My current SP500 analysis does not have any kind of fundamentals. I used Fractal Theory and Percent ATR distance measurements. This analysis is more of a prediction, I do not have enough data to count a target price. I have approximate target prices but these are at a distance so that profitable trades can be made from these levels. So if I use a stop order, the target prices are still 2RR.
Captain_Walker
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@meszaros, "Prediction?" :) As I said elsewhere - nobody can predict the future. Data? Some need it to make 'predictions' in the absence of data. I have replaced 'data' and 'predictions' with common sense. LOL.
meszaros
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@Captain_Walker, No no. I told myself about the prediction. :) There is also a prediction in the meteorological forecast. They may also be mistaken. However, we know that they can be wrong, but let's look at them every day. These technical analyzes are also a kind of prediction. Their hit rate is better than 50%. I would ask something. If I remember correctly at Gpro you said I did not care about the fundamentals. Then, with the "common sense" decision, what are the data you are using. Are not they fundamentals?
Captain_Walker
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@meszaros, I predict that a man will die tomorrow! LOL. I'll be right 100% of the time. :))
meszaros
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@Captain_Walker, Yes, that's great. :) Because your statement itself is based on a firm foundation. But here we see the alternating probability and random distribution functions. The foundation is not safe here.
Captain_Walker
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@meszaros, I'm a great predictor of people dying tomorrow. LOLOL.
Captain_Walker
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@meszaros, With GPRO the decision was based on a willingness to lose - if memory serves, US 400 in relation to potential reward - and reminiscing on my mistake with Alibaba.
With the S&P I look at the ridiculous picture of debt and the common sense that something cannot be built on nothing - alias Ponzi schemes. The economic data may well be considered as fundamentals by many. However, I'm not using that data to predict anything because I have no methodology relevant to 'fundamentals' to make any 'prediction' - and as you know I don't make predictions.
I've looked at the debt picture and other macroeconomic data only to inform my common sense. ;)