Week Ahead -- June 8-12, 2020 -- Hint: Record highs soon
Technicals:
Based on daily rsi it is likely we will get a pullback but remember bulls have plenty of room to make a higher low. I drew the percentages on the chart they have 8.12% to the trendline and 9.5% until the last higher low at 2905. So anything above 2905 is a higher low. 8% should be plenty room to clear the overbought conditions on the daily charts and we have plenty of room to go higher on the weekly and monthly. With that being said I will put an 80% probability that we will see record highs after the pullback. Bears would need to break impulsively below 2905 in order to change the trend generally tops don't come with an 8% gap between the trendline. It usually makes smaller and smaller up moves to the point where the bulls lose the trend. With low volume markets will move higher.
Fundamentals: 10 year yield broke out now up to .90, on my last post I pointed out just how bullish this was. The 2.5 million jobs number was because of the ppp loans for small businesses they had to hire them back. So basically a lot of business laid people off in March hired them back in May hoping there will be customer demand. As we know they will get laid off all over again at the expiration date which I believe is July 31. This is basically a managed market to go higher the fed is buying everything: treasury bonds, corporate bonds, municipal bonds, bailing everyone out, and sending cash to banks to directly buy stocks. In this environment stocks can't fall, we could have a nuclear war and stocks would go higher.
Based on daily rsi it is likely we will get a pullback but remember bulls have plenty of room to make a higher low. I drew the percentages on the chart they have 8.12% to the trendline and 9.5% until the last higher low at 2905. So anything above 2905 is a higher low. 8% should be plenty room to clear the overbought conditions on the daily charts and we have plenty of room to go higher on the weekly and monthly. With that being said I will put an 80% probability that we will see record highs after the pullback. Bears would need to break impulsively below 2905 in order to change the trend generally tops don't come with an 8% gap between the trendline. It usually makes smaller and smaller up moves to the point where the bulls lose the trend. With low volume markets will move higher.
Fundamentals: 10 year yield broke out now up to .90, on my last post I pointed out just how bullish this was. The 2.5 million jobs number was because of the ppp loans for small businesses they had to hire them back. So basically a lot of business laid people off in March hired them back in May hoping there will be customer demand. As we know they will get laid off all over again at the expiration date which I believe is July 31. This is basically a managed market to go higher the fed is buying everything: treasury bonds, corporate bonds, municipal bonds, bailing everyone out, and sending cash to banks to directly buy stocks. In this environment stocks can't fall, we could have a nuclear war and stocks would go higher.
Comment:
I don't want anyone shorting this market unless it is a very short term trade. I was posting to short just one week after the top in February and I have been bullish off the March bottom except for one false breakdown.
Comment:
I will say I haven't seen such a big gap between stocks and earnings since Dotcom bubble so the market will likely crash again even worse, but its too early to time it.
