The bear market rally has been fueled by a flattening of the coronavirus curve in Europe and NYC, as well as continued monetary and fiscal stimulus measures. As we move past these two items into next week, the market will begin to shift its focus to the underlying fundamentals (GDP declines, unemployment, earnings, etc.) and how long it will take to get back to "normal". As investors realize the recovery won't be V-shaped, optimism will begin to fade.
Today, the S&P hit the 50% retracement level at ~$2,800 and formed an island top / doji reversal on the daily chart. However, we'll need to wait for confirmation Monday. If so, we'll be taking another leg down to re-test the lows in the coming weeks.
Today, the S&P hit the 50% retracement level at ~$2,800 and formed an island top / doji reversal on the daily chart. However, we'll need to wait for confirmation Monday. If so, we'll be taking another leg down to re-test the lows in the coming weeks.
Note
Quick update on the upcoming week: OPEC just reached a deal to cut production, which will support oil prices and potentially equity markets as well. I expect any rise in equities to be short-lived given we're near significant resistance and the abysmal earnings season kicks off this week. Investors / traders will be paying close attention to commentary from various CEOs on their outlook for the rest of 2020 and how quickly they expect business to be back up and running. Not sure if they'll be able to comment on 2021, but that will certainly be important as the analysts try to come up with forward valuations - expect consistent downward earnings revisions shortly after which should drive stock prices lower. Additionally, there are a lot of economic data points being released, especially towards the back half of the week. Should be eventful!
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.