Bearish View on Dow
Updated
Thanks for viewing.
This is just from a technical view - earnings may surprise to the upside - and everyone may decide to value the market exactly the same a Jan - Feb 2020 - who knows.
My view is bearish because of:
Technical:
- For those that value Elliot Wave; I cannot see wave (4) and (5) as already having formed - but instead see us nearing the end of wave (4) formation,
- If this count is correct a reasonable target is 14,500 which is around the 0.65 Fib for the price rise since March 2009,
- If the EW count is correct, the wave (1) low will act as strong support - so 24,681 should not be exceeded (I note that the NQ has already breached this mark),
- The MACD histogram is trending down towards the zero line,
- There appears to be 'resistance' to the RSI going above 60 - in a bear market RSI of 60 tends to act as strong resistance (at least on the daily time-frame),
- A rising wedge seem to have formed and may have already broken out of the bottom of the formation,
- The recent local high of 24,264 still haven't been exceeded - if this remains unbroken - look out below,
- The 54 SMA moving average (which is very close) will likely act as resistance.
Fundamental:
- There seems not to be sufficient testing, mask-wearing, contact-tracing to fill me with confidence that this is even close to being considered contained,
- Despite the Fed pledging to back-stop the corporate debt - Corporations are still entering bankruptcy proceedings. The Fed can print $ from nothing with the press of a key, but they cannot print supply chains or consumer demand (which will remain subdued for some time to come,
- Your risk tolerance is significantly higher than most peoples if you are investing in Oil and Gas Exploration and Production at this time. I read a publication on the upcoming reporting of Exxon, that had a consensus expectation EPS of $0.02 and a price prediction of 10% price rise from last close of around $40 per share. I'm not sure how an EPS of $0.02 is bullish. Yesterday I saw Crude prices approach $10 a bbl - that is even stretching it for the lowest cost producers in the world, I would guess that there is not a single primary producer in the U.S. that is making profit at these levels (theguardian.com/business/2020/mar/09/saudi-arabia-price-war-wipes-billions-from-value-of-major-oil-firms-royal-dutch-shell-bp This article puts Exxon break even price over $70 a bbl - hope it isn't that high).
- It's not all negative, not all Companies reporting have supply chain issues, some can easily pivot to work at home policies, and may even benefit from increased advertising spending during a recession.
Disclosure: I am short after getting stopped into a short trade last week. It hasn't all gone my way since then - but I am hanging in there to see how it eventuates.
Good luck everyone, and protect those funds. I'm off for a run.
This is just from a technical view - earnings may surprise to the upside - and everyone may decide to value the market exactly the same a Jan - Feb 2020 - who knows.
My view is bearish because of:
Technical:
- For those that value Elliot Wave; I cannot see wave (4) and (5) as already having formed - but instead see us nearing the end of wave (4) formation,
- If this count is correct a reasonable target is 14,500 which is around the 0.65 Fib for the price rise since March 2009,
- If the EW count is correct, the wave (1) low will act as strong support - so 24,681 should not be exceeded (I note that the NQ has already breached this mark),
- The MACD histogram is trending down towards the zero line,
- There appears to be 'resistance' to the RSI going above 60 - in a bear market RSI of 60 tends to act as strong resistance (at least on the daily time-frame),
- A rising wedge seem to have formed and may have already broken out of the bottom of the formation,
- The recent local high of 24,264 still haven't been exceeded - if this remains unbroken - look out below,
- The 54 SMA moving average (which is very close) will likely act as resistance.
Fundamental:
- There seems not to be sufficient testing, mask-wearing, contact-tracing to fill me with confidence that this is even close to being considered contained,
- Despite the Fed pledging to back-stop the corporate debt - Corporations are still entering bankruptcy proceedings. The Fed can print $ from nothing with the press of a key, but they cannot print supply chains or consumer demand (which will remain subdued for some time to come,
- Your risk tolerance is significantly higher than most peoples if you are investing in Oil and Gas Exploration and Production at this time. I read a publication on the upcoming reporting of Exxon, that had a consensus expectation EPS of $0.02 and a price prediction of 10% price rise from last close of around $40 per share. I'm not sure how an EPS of $0.02 is bullish. Yesterday I saw Crude prices approach $10 a bbl - that is even stretching it for the lowest cost producers in the world, I would guess that there is not a single primary producer in the U.S. that is making profit at these levels (theguardian.com/business/2020/mar/09/saudi-arabia-price-war-wipes-billions-from-value-of-major-oil-firms-royal-dutch-shell-bp This article puts Exxon break even price over $70 a bbl - hope it isn't that high).
- It's not all negative, not all Companies reporting have supply chain issues, some can easily pivot to work at home policies, and may even benefit from increased advertising spending during a recession.
Disclosure: I am short after getting stopped into a short trade last week. It hasn't all gone my way since then - but I am hanging in there to see how it eventuates.
Good luck everyone, and protect those funds. I'm off for a run.
Note
Still hanging in there... unlike the S&P and NQ the Dow is yet to set a higher high since 29th April.Note
I'm still hanging in there, now fully hedged. But I'm just wondering what new bad news will cause the market to spike up. Why do I feel like a noob for expecting:- over 110,000 COVID-19 deaths, riots and the military on US streets, historic unemployment numbers, the trade war with China looking more like a new cold war, historically overvalued stocks, and dramatic cuts to 2020 corporate buy-backs to make the market sell-off? On the other side of the equation is states re-opening while hoping for no spike in new cases (I would be more positive if many states didn't end the lock-downs BEFORE cases started to plateau), historically low treasuries yields, and massive Fed stimulus.
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