THE MOST IMPORTANT CHART FOR THE STOCK MARKET $SPY SHORT
Hi Everybody.
So to begin please read this whole idea, this is what I truly believe is going on in the market and we will feel this downturn for sure.
We were already about to go into a bear market anyways, but COVID-19 was the catalyst that sped it up. lets talk fundamentals first.
- Unemployment. Currently more than 40 million Americans applied for unemployment from February to June 2020, this does not mean they lost their job some of them got furlough. I estimate that 20-25 million Americans lost their jobs permanently, that equals to 15% unemployment.
- Bankrupcies are increasing. before COVID-19 a lot of companies were already having liquidity and debt issues ex. GE, F, etc... there are a lot of companies that are operating at 50% capacity that means income will be slash by at least 50%, remember that there are fixed and variable costs, rent, insurance and other expenses does not change that means that many companies will struggle to make a profit in this market. Also the government gave a lot of small businesses loans, that increases their debt load. you can notice it when you go to a restaurant, its more than half empty. A lot of people are not consuming as they were before the pandemic. bankruptcies will keep increasing and those jobs will gone forever.
- FED buying bonds. no matter how much money the FED push into the economy, businesses will be losing revenue regardless and they eventually will have to layoff people.
-Debt and stock buybacks. Before COVID companies were borrowing large amounts of money because it was cheap. interest rates were low. they also spend a lot of their income buying back their stock which decreased their cash holdings and pushed up their valuations.
Technicals-
The market had more than a 20% drop in less than a month, and then we almost recovered to were we began with fundamentals as garbage as they are. the only explanation is we are in a market cycle downturn. If we look at the Wall Street cheat sheet we can see that it looks like we are in the complacency stage which is a great place to start a short trade. RSI is trending down from a recent overbought area. MACD turn Red and crossed over in a downward move. If price surpasses all time hi, this trade will be cancelled. Profit targets are in support levels.
PLEASE LOOK UP Wall Street CHEAT SHEET AND YOU WILL SEE THE CORRELATION BETWEEN
SPY AND THE CHEAT SHEET. ALSO BITCOIN JUST FINISHED THEIR CYCLE AND BEGINING THEIR BULL CYCLE. HAPPY TRADING!!
So to begin please read this whole idea, this is what I truly believe is going on in the market and we will feel this downturn for sure.
We were already about to go into a bear market anyways, but COVID-19 was the catalyst that sped it up. lets talk fundamentals first.
- Unemployment. Currently more than 40 million Americans applied for unemployment from February to June 2020, this does not mean they lost their job some of them got furlough. I estimate that 20-25 million Americans lost their jobs permanently, that equals to 15% unemployment.
- Bankrupcies are increasing. before COVID-19 a lot of companies were already having liquidity and debt issues ex. GE, F, etc... there are a lot of companies that are operating at 50% capacity that means income will be slash by at least 50%, remember that there are fixed and variable costs, rent, insurance and other expenses does not change that means that many companies will struggle to make a profit in this market. Also the government gave a lot of small businesses loans, that increases their debt load. you can notice it when you go to a restaurant, its more than half empty. A lot of people are not consuming as they were before the pandemic. bankruptcies will keep increasing and those jobs will gone forever.
- FED buying bonds. no matter how much money the FED push into the economy, businesses will be losing revenue regardless and they eventually will have to layoff people.
-Debt and stock buybacks. Before COVID companies were borrowing large amounts of money because it was cheap. interest rates were low. they also spend a lot of their income buying back their stock which decreased their cash holdings and pushed up their valuations.
Technicals-
The market had more than a 20% drop in less than a month, and then we almost recovered to were we began with fundamentals as garbage as they are. the only explanation is we are in a market cycle downturn. If we look at the Wall Street cheat sheet we can see that it looks like we are in the complacency stage which is a great place to start a short trade. RSI is trending down from a recent overbought area. MACD turn Red and crossed over in a downward move. If price surpasses all time hi, this trade will be cancelled. Profit targets are in support levels.
PLEASE LOOK UP Wall Street CHEAT SHEET AND YOU WILL SEE THE CORRELATION BETWEEN
SPY AND THE CHEAT SHEET. ALSO BITCOIN JUST FINISHED THEIR CYCLE AND BEGINING THEIR BULL CYCLE. HAPPY TRADING!!
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