The S&P rally continues, defying all fears of a recession
Updated
Last week was marked by erratic price movements, leading many to recall the old adage, "no trade might be your best trade." The most confusing (and devastating) price action occurred on Thursday following the FOMC's interest rate decision. The Fed cut rates by 0.5 percentage points, sparking fears of an upcoming recession. Wednesday ended with a strong bearish "falling star" candle, tempting traders to take large SHORT positions. To be honest, I would have likely done the same if I had been trading that day (luckily, I wasn’t), as the least one would have expected was an overnight rally that wiped out short positions when the market opened on Thursday.
This series of events is a perfect example of what makes trading so challenging— even a solid setup can fail spectacularly without any clear reason.
Now, let's try to assess the current situation:
1. The Fed cut rates by 0.5 percentage points – This is actually positive for the economy and the stock market for many reasons (e.g. cheaper borrowing costs). At the same time there are no objective signs of a recession, only fears.
2. The SPX reached a new all-time high – How can this be bearish?
3. Both weekly and daily charts show a strong uptrend.
4. Almost all major SPX sectors closed the week strong, reflecting investor confidence.
In summary, the market remains very bullish, with no indication that the trend is reversing anytime soon. Short term price action might be erratic, but long-term things look good both from technical and fundamental perspectives.
Let’s stay calm and prudent.
Important levels:
This series of events is a perfect example of what makes trading so challenging— even a solid setup can fail spectacularly without any clear reason.
Now, let's try to assess the current situation:
1. The Fed cut rates by 0.5 percentage points – This is actually positive for the economy and the stock market for many reasons (e.g. cheaper borrowing costs). At the same time there are no objective signs of a recession, only fears.
2. The SPX reached a new all-time high – How can this be bearish?
3. Both weekly and daily charts show a strong uptrend.
4. Almost all major SPX sectors closed the week strong, reflecting investor confidence.
In summary, the market remains very bullish, with no indication that the trend is reversing anytime soon. Short term price action might be erratic, but long-term things look good both from technical and fundamental perspectives.
Let’s stay calm and prudent.
Important levels:
- Last major weekly high (538). As long as it holds buyers have control over weekly chart.
Trade active
Got filled at 568. Profit target 578. Stop-loss 564.1Trade closed manually
Closed at 573. NVDA is very weak today, dragging down QQQ and the rest of the market. I don’t want to stay exposed to this weakness over the weekend. Better to take cash
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