It's been a while since I posted a meaningful SPY analysis and in this post, I am doing just that. I will go over what I see in the chart and some fundamentals to back my analysis. This shouldn't be considered as trading or investment advice because the market is inherently random.
Technicals:
SPY broke out of the boarding wedge pattern and the price action suggests it is bullish until proven otherwise. Ignoring the short-term price action, I see 37-40% upside in SPY within 2 years before we can see a major correction. I could be wrong and the price could fall down to 286-294 levels.
Fundamentals:
The SPY is trading at above-average PE of 37 but with free money floating around the markets it has the mojo to go full parabolic. The USD is losing its value against other currencies which is also a good sign for the Stock Market. For the long-term analysis, I like to subscribe to the dollar milkshake theory which states US equities, USD and Gold should go up in value while other currencies lose their value against USD.
With Biden being our next president, taxes on everything are going to be increased. In his current plans, the corporate tax is set to increase from 21% to 28%, and the capital gains tax from 23.8% to 43.4%. Under normal circumstances, the wealthy should be trying to get rid of some of their holdings just to not get fcked by Biden's tax policies. Avaz, wealthy selling some of their holdings and high corporate tax, doesn't it mean we will see a huge sell-off in the market? you might be wondering. And the simple answer is NO. The U.S corporates have ways to avoid paying taxes while taxes are high to preserve their profits and I think the volatility we saw during Trump's presidency is wealthy and corporates balancing their balance sheets.
With China competing with the USA, the USA will do whatever it takes to preserve its economy and its place as the world's only superpower. Even if it means printing trillions of dollars or going to war. USD is the world reserve currency after all and there will always be high demand for the USD. It is in the best interest of the U.S govt to keep it that way. Therefore, printing money shouldn't affect the USA in a long run as long as the world has faith in the USA vs China. A similar thing happened in Japan if you want to know more watch www.youtube.com/watch?v=ErUQnd-Y...
The short-term cheap dollar means it's good for the US equities because the value of the business goes up vs the value of the USD. In short, I think the bull market will last at least 2 more years before the USD starts gaining momentum vs other currencies and that's when the value of the US companies will start going down vs the USD.
Its just a theory. Let's see what happens. If you want to know more about U.S. economy and tax laws under Biden's presidency I recommend watching www.youtube.com/watch?v=JTuRoAXp...
Hope you guys have a lovely weekend and feel free to post your thoughts in the comment section below.
Technicals:
SPY broke out of the boarding wedge pattern and the price action suggests it is bullish until proven otherwise. Ignoring the short-term price action, I see 37-40% upside in SPY within 2 years before we can see a major correction. I could be wrong and the price could fall down to 286-294 levels.
Fundamentals:
The SPY is trading at above-average PE of 37 but with free money floating around the markets it has the mojo to go full parabolic. The USD is losing its value against other currencies which is also a good sign for the Stock Market. For the long-term analysis, I like to subscribe to the dollar milkshake theory which states US equities, USD and Gold should go up in value while other currencies lose their value against USD.
With Biden being our next president, taxes on everything are going to be increased. In his current plans, the corporate tax is set to increase from 21% to 28%, and the capital gains tax from 23.8% to 43.4%. Under normal circumstances, the wealthy should be trying to get rid of some of their holdings just to not get fcked by Biden's tax policies. Avaz, wealthy selling some of their holdings and high corporate tax, doesn't it mean we will see a huge sell-off in the market? you might be wondering. And the simple answer is NO. The U.S corporates have ways to avoid paying taxes while taxes are high to preserve their profits and I think the volatility we saw during Trump's presidency is wealthy and corporates balancing their balance sheets.
With China competing with the USA, the USA will do whatever it takes to preserve its economy and its place as the world's only superpower. Even if it means printing trillions of dollars or going to war. USD is the world reserve currency after all and there will always be high demand for the USD. It is in the best interest of the U.S govt to keep it that way. Therefore, printing money shouldn't affect the USA in a long run as long as the world has faith in the USA vs China. A similar thing happened in Japan if you want to know more watch www.youtube.com/watch?v=ErUQnd-Y...
The short-term cheap dollar means it's good for the US equities because the value of the business goes up vs the value of the USD. In short, I think the bull market will last at least 2 more years before the USD starts gaining momentum vs other currencies and that's when the value of the US companies will start going down vs the USD.
Its just a theory. Let's see what happens. If you want to know more about U.S. economy and tax laws under Biden's presidency I recommend watching www.youtube.com/watch?v=JTuRoAXp...
Hope you guys have a lovely weekend and feel free to post your thoughts in the comment section below.
