SPY showing signs of BULLISH DIVERGENCE at play
Updated
Looking at the weekly MACD & RSI, we can see they have been consistently gaining strength while price action moved down. It is possible that October may have been the BOTTOM of this market correction
however it is way too soon to tell, & we need time to continue along as we see markets digest rate hikes, earnings, CPI, etc...
While everyone and their grandmother is bearish on the market in the next 12 months, I would like to provide my own insight into SPY and why I think we could be in the early beginnings of a bullish divergence taking place here
For Starters, let's look back at the state of the economy at the end of Q2 2022 (June 2022)
- CPI was running at a record breaking 9.1% & US GDP Data showed 2 consecutive Quarters of Negative growth, confirming a recession
Coming back to today... Q3 and Q4 GDP came in positive, we just got the news this morning that Q4 2022 GDP clocked in at 2.9%... higher than the 2.6% originally expected by many analysts
while CPI is still sky high at 6.5% for the month of December, the effects of the Federal Reserve's path of Interest Rate Hikes is slowly but surely taking hold on the economy...
As 2023 continues along and if we don't see major dropoffs throughout earnings season, there is a possibility that spy could rally past 400 in the coming months & quarters
Companies with bad products, bad services & terrible profit margins will get hit worse than they were in 2022
While those with strong balance sheet portfolios like TSLA will weather the storm and come out on the other end of this correction much more profitable than before
Inflation or Noflation, Interest Rates or U turn... I expect individual companies with high pricing power will survive & potentially carry the Indexes out of a recession as Institutional & Wall Street Money shifts their exposure and positioning into such companies
However, your best guess is as good as mine as to how the markets will go in 2023 and 2024
In the history of me being alive on this earth, I have never lived through a rate hike cycle or an inflation cycle like we have today, Today's market is wildly different compared to the 70s & 80s recessions as today we have relatively anchored inflation expectations, no oil embargoes, departure of the gold standard, etc.
i will publish a new idea on SPY if i see signs in my Stochastic RSI & RSI indicators flashing of a bear market & make changes accordingly, and when that time comes I'll explain to the best of my ability what happened & what caused the change
however it is way too soon to tell, & we need time to continue along as we see markets digest rate hikes, earnings, CPI, etc...
While everyone and their grandmother is bearish on the market in the next 12 months, I would like to provide my own insight into SPY and why I think we could be in the early beginnings of a bullish divergence taking place here
For Starters, let's look back at the state of the economy at the end of Q2 2022 (June 2022)
- CPI was running at a record breaking 9.1% & US GDP Data showed 2 consecutive Quarters of Negative growth, confirming a recession
Coming back to today... Q3 and Q4 GDP came in positive, we just got the news this morning that Q4 2022 GDP clocked in at 2.9%... higher than the 2.6% originally expected by many analysts
while CPI is still sky high at 6.5% for the month of December, the effects of the Federal Reserve's path of Interest Rate Hikes is slowly but surely taking hold on the economy...
As 2023 continues along and if we don't see major dropoffs throughout earnings season, there is a possibility that spy could rally past 400 in the coming months & quarters
Companies with bad products, bad services & terrible profit margins will get hit worse than they were in 2022
While those with strong balance sheet portfolios like TSLA will weather the storm and come out on the other end of this correction much more profitable than before
Inflation or Noflation, Interest Rates or U turn... I expect individual companies with high pricing power will survive & potentially carry the Indexes out of a recession as Institutional & Wall Street Money shifts their exposure and positioning into such companies
However, your best guess is as good as mine as to how the markets will go in 2023 and 2024
In the history of me being alive on this earth, I have never lived through a rate hike cycle or an inflation cycle like we have today, Today's market is wildly different compared to the 70s & 80s recessions as today we have relatively anchored inflation expectations, no oil embargoes, departure of the gold standard, etc.
i will publish a new idea on SPY if i see signs in my Stochastic RSI & RSI indicators flashing of a bear market & make changes accordingly, and when that time comes I'll explain to the best of my ability what happened & what caused the change
Note
DId i just predict the fed rally?
Disclaimer
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.