TA meets speculative fundamental analysis on SPY
Since the "V-shaped" recovery started, we've seen nothing but divergence.
It's mostly speculation, but me and many other people believe this volatile bull run since the start of the COVID-19 crisis is almost solely because of the FED blindly pumping money into securities. While that money is not running out anytime soon, we're seeing a significant volume and momentum slowdown in the last two to three weeks. RSI is the only thing that is not diverging even though the average SRSI is lower recently (the last 2-3 weeks).
More speculation: Multiple news sources are reporting investors becoming more cautious of a "second wave" or "second peak" of the corona virus. I personally believe it's virtually inevitable in the US at least. Here's why:
1) Protests for civil rights have caused thousands of people to gather closely for extended periods of time across weeks (shouting chants and contacting each other directly). Even with masks and other PPE, this presents a great risk of virus propagation.
2) Most states have reopened/partially reopened increasing the amount of contact to the public workers and patrons have. Even with SOME states implementing strict restrictions on the reopening, this presents a great risk of virus propagation, not to mention it has already caused an uptick in the daily new cases within the US.
3) Developing and 3rd world countries are seeing their own first peak in cases. This is driving the record daily new cases across the world we saw yesterday of 146,111 new cases. The record before that was the 6/16 with 143,566 new cases. The record before that was 6/12 with 143,421. (Data provided from worldometers.com) As TA would say, new higher highs with an exponentially increasing moving average would say greater numbers are to come.
So while this bull run could continue for a relatively short period of time (2-3 more weeks), all signs point to a significant pull back that the FED will not be able to revert without significant fiscal policy.
This analysis along with the inverted yield curve, dramatic reduction in consumer spending, dramatic increase in unemployment, and much more, cause me to be conservatively switching back to a bear market strategy across my portfolio.
It's mostly speculation, but me and many other people believe this volatile bull run since the start of the COVID-19 crisis is almost solely because of the FED blindly pumping money into securities. While that money is not running out anytime soon, we're seeing a significant volume and momentum slowdown in the last two to three weeks. RSI is the only thing that is not diverging even though the average SRSI is lower recently (the last 2-3 weeks).
More speculation: Multiple news sources are reporting investors becoming more cautious of a "second wave" or "second peak" of the corona virus. I personally believe it's virtually inevitable in the US at least. Here's why:
1) Protests for civil rights have caused thousands of people to gather closely for extended periods of time across weeks (shouting chants and contacting each other directly). Even with masks and other PPE, this presents a great risk of virus propagation.
2) Most states have reopened/partially reopened increasing the amount of contact to the public workers and patrons have. Even with SOME states implementing strict restrictions on the reopening, this presents a great risk of virus propagation, not to mention it has already caused an uptick in the daily new cases within the US.
3) Developing and 3rd world countries are seeing their own first peak in cases. This is driving the record daily new cases across the world we saw yesterday of 146,111 new cases. The record before that was the 6/16 with 143,566 new cases. The record before that was 6/12 with 143,421. (Data provided from worldometers.com) As TA would say, new higher highs with an exponentially increasing moving average would say greater numbers are to come.
So while this bull run could continue for a relatively short period of time (2-3 more weeks), all signs point to a significant pull back that the FED will not be able to revert without significant fiscal policy.
This analysis along with the inverted yield curve, dramatic reduction in consumer spending, dramatic increase in unemployment, and much more, cause me to be conservatively switching back to a bear market strategy across my portfolio.
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