Possibility of downswing I warned yesterday,came. The Federal Reserve Board of Governors threw cold water in assessing the pace of recovery, which continued to sell in large numbers and did not indicate that it was more ready to support it than it is today. It’s a disappointment if no one really discusses the V-shaped recovery. The pace is uneven. One of the few that was fairly “equally distributed” yesterday was the S & P 500’s sectoral losses.
Investors jumped into the selling tide, Confirm yesterday’s reservation:
(…) There’s a Fed meeting late today, not looking for hawkish surprises or complete optimism, but investors aren’t seizing the opportunity. It’s like a pre-US Open mantra to sell now and ask questions later.
With volatility skyrocketing from September to October 2020, everyone wonders if this is the beginning of another corrective action and how quickly stocks will recover.Don’t make a mistake about it, they recover – the bull doesn’t end up with a long shot, and as I wrote on Monday 2021 prophecy, This year will still be a good year for stocks.
Let’s evaluate the damage suffered by yesterday’s sale and see the future course (chart provided by: stockcharts.com).
S & P 500 outlook
The wave of selling the S & P 500 went beyond yesterday’s Fed and instead gained momentum. The daily indicator flashed a sell signal, which in turn does not rule out stabilization and will disappoint those seeking a fix (10% or similar). The bull market is intact and one harsh federal government assessment of the situation on the ground does not end it.
High-yield corporate bonds to short-term government bonds (HYG: SHY) hold up much better than equities, and investment grade corporate bonds to long-term government bonds have not fallen below their recent lows. Otherwise, despite previous weak price recovery attempts, it is a good sign that stocks are summarizing their actions.
The high yield corporate bond to short-term government bond ratio (HYG: SHY), which is a superposition of S & P 500 (black line), shows how far the very short-term vulnerability of equities, which was emphasized yesterday, has reached.
I was optimistic about the opening of the regular session on Tuesday, but the Bulls missed a good opportunity to act and the resulting signal favored the bear to intervene on Wednesday. Changing the tone, that’s the essence of my trading style – instantly assessing the outlook, and drawing conclusions accordingly.
But what about follow-through sales and reflexive rebounds? Which one will win that day?
Other S & P 500 clues
The S & P 500 Force Index has fallen deep into the negative territory. Short-term damage occurs while the Bollinger Bands (a measure of volatility) are barely visible, and the slopes of both moving averages remain the same. It’s going well as we’ve made public and verifiable calls outside the website at the start of today’s Asian session, so we’re likely to witness a partial recovery in today’s regular session. It seems that.
And it’s no wonder if you look at volatility ($ VIX) and see how extraordinary yesterday’s move was.
The spread between 3-month and 10-year government bonds shows that the game hasn’t really changed. It also made me speak out about not being afraid of yesterday’s inventory slides.
Where are the Treasury (TLT ETF) meetings? Thanks to the dark federal view, daytime performance would have been expected to be much better. But it wasn’t. The Treasury could pause at these levels or rise next, but I don’t expect to put any temporary pressure on stocks.
Long upper knots for sale with temporary strength, is it all that was in the dollar’s rise? That is another clue that the stock has overreacted.
The expected downtrend was totally bloody, and it certainly tempted buyers to act – just as the odds liked. Gold was kept relatively well and there were no other indicators to declare that it was the beginning of the actual revision. My open long position is black! Again, take a look at today’s actions to prove that the bull market is at least not at stake …
Trading Position (Short Term; Futures; My View): The already opened long position (100% position size) with a stop loss at 3525 and the first upward goal at 3900 is justified in terms of risk and reward. Below is my long-standing and proven approach to managing cash per transaction.
If you are using the e-mini S & P 500 futures, one point move on the S & P 500 will be $ 50. It’s best to multiply this by the difference between entry and stop loss and not risk more than 6% or up to 8% of your trading account on this transaction alone.
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All essays, surveys and information represent Monica Kingsley’s analysis and opinion based on the latest available data. Despite careful investigation and best efforts, it turns out to be wrong and is subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or completeness of the reported data or information. Her content is useful for educational purposes and should not be relied upon as advice or interpreted as providing any kind of recommendation. Futures, stocks and options are financial instruments that are not suitable for all investors. Please be aware that you are responsible for investing. Monica Kingsley is not a registered securities advisor. By reading her writings, you agree that she is not responsible for your decisions. Investing, trading and speculating in financial markets can be at high risk of loss. Monica Kingsley may take short or long positions in any security, including those described in her writings, and may make additional purchases and / or sales of those securities without notice. ..
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Late yesterday I called the S & P 500 ambush about to end
https://www.financebrokerage.com/late-yesterday-i-called-the-sp-500-ambush-as-likely-over/ Late yesterday I called the S & P 500 ambush about to end