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Explaining the moves on the S&P500So far this correction on the S&P has been extremely orderly and makes a lot of sense. A lot of things are very similar to the 2018 correction, especially when it comes to how the market has moved. The key differences in the current environment are that the Fed hasn't raised rates as much, inflation is a lot higher, debt is a lower higher, the economy is in a worse shape, energy is a lot more expensive and markets are still a lot higher than they were back then. Yet volatility hasn't gotten out of control and the market is moving in an orderly fashion. Now the key reasons as to why stocks have fallen so much are: 1) Future earnings have been revised downwards due to bad economic conditions and deglobalization, 2) Inflation is hurting a lot of companies as their expenses keep going up, 3) Inflation has caused markets and the Fed to raise rates, something that has put a lot of pressure on everyone that wants to borrow or has borrowed money ( funds, governments, corporates, retail), 4) Markets were significantly elevated and the valuations of many companies were unreasonable. At the moment the market is bouncing as many investors got extremely bearish. The sentiment everywhere was so bearish, and although I personally don't think the bottom is in, I believed a relief rally was going to come. Why? Well, let's start with some fundamental and technical analysis and see how we got here... Since Mar 2021 inflation started getting hot, while certain sectors of the market started getting hit. In November inflation became too hot and the Fed made clear that it would fight inflation by raising rates and stopping QE. In December and January the market had an ordinary dip down to the May-June 2021 highs, swept some key lows and bounced. In February as inflation wasn't going down and Russia was positioning to invade Ukraine, markets started becoming fearful and fell enough to fill a double gap on SPY, and bottomed soon after Russia invaded Ukraine. Fear had reached a peak at that time, but the bounce wasn't all that strong as the Fed was still planning to do its first rate hike. Soon the market rolled over again without making a new low. Once the market swept a low on SPX but not on SPY it bounced hard just a few days before the Fed meeting. After the Fed meeting it rallied hard and went up to the Jan-Feb triple top, swept the highs, hit resistance and partially filled an open gap. The same way the market went for the highs and the gap in its reach for liquidity (hunting stops), then went for the lows and the gaps lower, as there were several of them. The drop begun before the next Fed meeting, and on the second Fed meeting they raised rates by 0.5%. They also made clear that they didn't plan any hikes larger than 0.5%, something that initially caused the market to spike higher, as it interpreted the news as bullish, while also expecting the second meeting to play out like the first one. However that wasn't the case and the market crumbled lower soon after. Investors had the wrong expectations and the market was still heavy. Once the market fell by 20%, it paused, but as it had formed a cheeky triple bottom, it made a final push lower before bouncing higher. It also hit the Monthly S3 which is a great place to bottom, consolidated a bit and then bounced hard. It has now reclaimed key support levels and could go up to 430-440 (4300-4400) in order to take out the triple top and retest the key breakdown zone, along with the Yearly Pivot. What could come after this is unclear. In my opinion inflation has peaked and although it will probably be positive YoY, as bonds yields have started coming down and the terminal rate seems to be around 2-3%, the Fed might slow down a bit. They might start being more dovish in their next meetings as they don't want to push things too much. Inflation is already coming down in the US due to a strong dollar, equities collapsing, a much lower growth in the money supply and with QT starting in June. At the same time however, the energy and food shortages could become so extreme, something that the bond market probably already knows that and that's why it looks shaky. Things are so bad for ordinary people, that if the Fed & government don't start to support everyone in need, things could get very ugly. Therefore bond yields coming down along with inflation could simply be a short term pause and nothing more than that. Maybe in a few months they could resume higher, putting additional pressure on stocks. In my opinion stocks could rally by another 5-6% before rolling over again, although I am not sure whether the bottom is in or not. I tend to believe it isn't, and that stocks would need to fall 5-15% from their recent low, but wouldn't be surprised if they go up 5%, drop 7% and then go higher again.
AMEX:SPY
by BitcoinMacro
1
Dog Days of Summer for S&P 500If we perform a fib retracement from the bottom of the 2009 crash to the 4800 top and the bottom of the 2020 crash to the 4800 top. Some of the retracements line up. We have already seen it bounce off the first alignment from just above the 3800 level. The bottom seems to be pointing to around 3200. It probably won't go there right away, as a slight bounce is likely from here to work off the oversold condition followed by the next leg down. If we hit the 3500 level I expect a strong bounce and fake bottom to be put in place. Do not be fooled or use leverage, slowly accumulate positions at these levels.
SP:SPXShort
by Lazy_Investing
SPX - SPX is due to drift lowerWe continue to be bearish on SPX. Because of that, we would like to set a new short-term price target for SPX at 4100 USD. We would also like to set a medium-term price target of 4000 USD. Technical analysis - daily time frame RSI and MACD are bearish. Stochastic oscillates in the bearish area; however, it points to the upside. DM+ and DM- are bearish. ADX reflects a strong downtrend. Overall, the daily time frame is bearish. Technical analysis - weekly time frame RSI, MACD, Stochastic, DM+, and DM- are all bearish. ADX grows which is bearish. All this coincides with the condition observable in QQQ. Overall the weekly time frame is bearish. Illustration 1.01 Similarities in the condition of SPX and QQQ are detailed in the idea above. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
SP:SPXShort
by Tradersweekly
5
S&P 500 Still in Downtrend The market touched the bottom of the down channel yesterday and turned around. From here the market will likely bounce, however, the gap above 4k was not closed so expect this to get filled after this countertrend bounce. The weaker the market, the more likely we will see 3600 area before this is over. Short-term = Expect a countertrend bounce to around the 4400 area. Medium-term = The trend is definitely down, look to short at key resistance levels. Long-term = Some stocks are already on sale (DIS, COIN) to name a few. As the market drops, look to build long-term positions in stocks at a discount.
CME_MINI:ES1!Short
by Lazy_Investing
1