SPX (06/15/2020) - The beginning of trend reversal ?
Updated
FA
-During FOMC, FED indicated there will be a slow economic recovery. By keeping rates at 0% until 2022, FED sent out a bearish signal for the market, as a result, sell-off happened.
-COVID-19 cases are steadily moving up. Brazil and South American countries, in general, are having an outbreak, pushing global cases into the new height.
worldometers.info/coronavirus/?utm_campaign=homeAdUOA?Si
cnbc.com/2020/06/13/san-francisco-doctors-recount-experience-fighting-coronavirus-in-nyc.html
Second wave of Covid-19 is possible as Riot and overly optimistic behaviors are happening.
-Parts of China are being shut down again because of new Covid-19 cases emerged.
theguardian.com/world/2020/jun/13/beijing-china-new-covid-19-cases-linked-to-food-market
-FED is lowering Treasury purchasing, however, REPO level is still the same.
newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details
newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/treasury-securities/treasury-securities-operational-details
-Riot and looting are still happening across the US. To be honest, I don't think there will be a solution to these particular issues and this could last for weeks.
-Keep in mind the market is not stabilized yet.
youtube.com/watch?v=2WBZfYva6Hg
However, please keep these analyses as a bigger picture before planning for a long-term investment, which is very different from Trading.
-VIX came back to 40 levels.
-US national debt is now more than 26 trillion
usdebtclock.org/
-US total debt, including corporates, is now more than 55.9 trillion dollars.
cnbc.com/2020/06/11/total-us-debt-surges-to-55point9-trillion-amid-big-increases-in-corporate-and-government-borrowing.html
With a high level of debt, the recovery time will be longer than expect (2022). USD will be in trouble if the government keeps printing money and increases in spending (which will likely happen by the 2nd stimulus plan).
-International travel won't be back to normal until 2022.
In a nutshell: To think the stock market is back to 2020 positive at this moment is too optimistic. The correction will take place soon.
TA
-SPX broke EMA (30) on Friday: Bearish
-There is still a possibility for SPX to come back to the 3120 levels.
-Squeeze and RSI are being bearish, in this case for SPX.
-There is a trend reversal for SPX. However, it needs to be confirmed next week, especially on Monday and Tuesday.
In conclusion, the trend hasn't changed so far. However, with the current situation, there could be another huge leg down for the market, aka correction. Until then, it's still risky to hop in short positions, in fact, there are risks that SPX can be bullish due to FED's actions. If the trend reversal is confirmed next week, it's time to short.
Thank you and good luck.
-During FOMC, FED indicated there will be a slow economic recovery. By keeping rates at 0% until 2022, FED sent out a bearish signal for the market, as a result, sell-off happened.
-COVID-19 cases are steadily moving up. Brazil and South American countries, in general, are having an outbreak, pushing global cases into the new height.
worldometers.info/coronavirus/?utm_campaign=homeAdUOA?Si
cnbc.com/2020/06/13/san-francisco-doctors-recount-experience-fighting-coronavirus-in-nyc.html
Second wave of Covid-19 is possible as Riot and overly optimistic behaviors are happening.
-Parts of China are being shut down again because of new Covid-19 cases emerged.
theguardian.com/world/2020/jun/13/beijing-china-new-covid-19-cases-linked-to-food-market
-FED is lowering Treasury purchasing, however, REPO level is still the same.
newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details
newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/treasury-securities/treasury-securities-operational-details
-Riot and looting are still happening across the US. To be honest, I don't think there will be a solution to these particular issues and this could last for weeks.
-Keep in mind the market is not stabilized yet.
youtube.com/watch?v=2WBZfYva6Hg
However, please keep these analyses as a bigger picture before planning for a long-term investment, which is very different from Trading.
-VIX came back to 40 levels.
-US national debt is now more than 26 trillion
usdebtclock.org/
-US total debt, including corporates, is now more than 55.9 trillion dollars.
cnbc.com/2020/06/11/total-us-debt-surges-to-55point9-trillion-amid-big-increases-in-corporate-and-government-borrowing.html
With a high level of debt, the recovery time will be longer than expect (2022). USD will be in trouble if the government keeps printing money and increases in spending (which will likely happen by the 2nd stimulus plan).
-International travel won't be back to normal until 2022.
In a nutshell: To think the stock market is back to 2020 positive at this moment is too optimistic. The correction will take place soon.
TA
-SPX broke EMA (30) on Friday: Bearish
-There is still a possibility for SPX to come back to the 3120 levels.
-Squeeze and RSI are being bearish, in this case for SPX.
-There is a trend reversal for SPX. However, it needs to be confirmed next week, especially on Monday and Tuesday.
In conclusion, the trend hasn't changed so far. However, with the current situation, there could be another huge leg down for the market, aka correction. Until then, it's still risky to hop in short positions, in fact, there are risks that SPX can be bullish due to FED's actions. If the trend reversal is confirmed next week, it's time to short.
Thank you and good luck.
Note
Trend is confirmedNote
Going up on Tuesday.
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