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New trend line for the S&P? 4th industrial revolution starting?Is there a new trend line on the horizon for the S&P 500 and the market overall? I compare different trend lines including what I guess to be ultra bears like Peter Schiff & Jeremy Grantham's trend line. If we are entering the 4th industrial revolution, that people like Cathie Wood & Klaus Schwab are talking about, I think we should expect a new trend line to appear. One that is a step change in the ongoing growth of the overall market compared to the old trend line of ~7.5% More time is needed to see what the new trend will ultimately be, but it seems obvious that growth has accelerated in recent time with more companies than ever growing revenue at rates higher than 40%, 50%, 60%, and even 100% a year.
SP:SPXLong
by JoeBusLife
41
SPY COULD FORM A MACRO WEDGE - INTEREST RATESGet your tin foil hats ready for this one folks. It's a long shot, but just throwing this perspective out there to see how it lands in a few weeks. SPY loves to form wedges, especially after the breakout of other patterns. In this case, SPY was forming quite the strong channel since September, until it broke out in January (see chart below) Now that it has broken out, and volatility is at its highest, one potential outcome is SPY / SPX forming a wedge to calm the storm. Here is where it gets interesting - charts also love symmetry. The price action on one side of a pattern often times matches the price action on the opposite side as well (time is a factor that affects how this looks on the chart, either squeezing or elongating the trends) Before SPY dumped in January, it had a stair stepping, wedge-like pattern on it's way up - which took 200 days to reach ATH from $415 (a key level). SEE BELOW Now here is where the tinfoil hat comes on. So far, SPY has mimicked the double bottom formation first seen on the left side. SEE BELOW Notice both form a 'W' shape, with the left side having less volatility, and therefore having more time to form price action (30 days) The right side having more volatility, formed a similar pattern in 10 days. 1/3 of the time This would make sense if we also look at the volume, which is on average 2.4x higher than last September / October. Following this same logic, we should reach 415 in approximately 1/3 the time it took for SPY to reach ATH from 415 (200 days mentioned previously.) That means it would take ROUGHLY 66 days to reach 415 from ATH -- March 11 -- The Friday before the first released rate hike and when the FED will release their interest rate plans. This would put the March 15 - 16 FOMC meeting right at the vertex of this wedge. The MACD also confirms this in a way. If SPY continues its current MACD trend on the Monthly, it should approach baseline in March, flipping red (Take a look at SPY chart, and what happens when the monthly MACD flips red without a catalyst like the FED meeting.) It also means we could see a more volatile spike to around 460 in the very short term (first week of February or so) and then a trend down from there. What are some problems with this perspective? It's based entirely off of connecting dots that may not even be there. Also, with all of the news and volatility happening right now, SPY could do something completely un-organized and un-predictable, but it doesn't hurt to try. This post was written largely for fun, and I'll keep the analysis in the back of my mind. However, I do not plan on basing any of my strategies or trades on the idea alone. Let's see how poorly this ages ;) - Thanks for reading!
AMEX:SPYShort
by SJ_CAP
3
USD/CAD Outlook (14 March 2022)Overall, USD/CAD is ranging across. Recently, USD/CAD broke below the key level of 1.28. The Canadian employment data released last Friday indicated a strong rebound in the jobs market from the previous month’s loss of jobs. - Employment Change (Actual: 336.6K, Forecast: 132.0K, Previous: -200.1K) - Unemployment Rate (Actual: 5.5%, Forecast: 6.2%, Previous: 6.5%) USD/CAD’s next support zone is at 1.26100 and the next resistance zone is at 1.29200. Look for short-term selling opportunities of USD/CAD.
Short
by JinDao_Tai
Yellen says the US won't have a recession - we disagree'US TREASURY SECRETARY YELLEN: I DO NOT EXPECT A RECESSION TO OCCUR IN THE US.' Janet Yellen said this yesterday. The market disagrees. Right now, we're seeing the 2s10s curve flatten. When this happens, the market is expecting long term rates to fall relative to short term rates, or in other words, they're expecting bad times ahead. Traditionally, the 2s10s curve has been a fantastic predictor of recessions, purely because the expectations of the future are exactly what is being displayed. The horizontal red line is where the curve becomes inverted - which means short term rates are HIGHER than long term rates. The indicator in the bottom panel shows recessions, identified by the red dots. You can look back historically to when the curve has inverted to see that it certainly does predict an economic downturn. If we conceptualise this to 'reality', ask yourself what a central bank does in a time of stress... It lowers rates, right? So it would make sense for yields further along the curve to be relatively LOWER than short term rates if the market is expecting a period of stress in the near future.
TVC:US10Y
by FinkPro
6
How the Fed's Rate Hikes Affect the Market (or Not)In this post, I'll be demonstrating how the Fed's rate hikes affect the equity market (or how they don't), through historical examples and analyses of market psychology. This is an issue that has been going on for a while, and one that has caught the attention of all market participants. Yes, tapering and rate hikes aren’t necessarily good news, but I don’t think that 1) they necessarily indicate the beginning of a bear market/recession, and 2) the Fed is as powerful and influential as we think they are. This is not financial advice. This is for educational purposes only. Introduction - There’s a myth, a misconception in the market that the Fed allegedly rescues falling markets with rate cuts and easing measures, and vice versa for when the market is overheated. - This myth began in 1987 during Black Monday, when Alan Greenspan’s Fed cut rates after the crash, creating an impression that the Fed was directly responding to the stock market. - This is when the (mis)belief that the Fed would put a floor under a a falling market stuck. - Nevertheless, if we analyze the data, it actually demonstrates that the Fed stood pat for most corrections, and cutting cycles typically arrive during bear markets, just as coincidence. Historical Cases - There are only two occasions in history where the Fed’s cutting cycles corresponded with market lowpoints. - The first is the aforementioned Black Monday of 1987, and even for this case. - If we take a look at the situation back then, it’s not so much that the Fed made international moves that contributed to history, but rather that the bear market started amid a global liquidity crisis. - With excess liquidity, the rates should have been flat, or down, but that wasn’t the case. - Thus, the Fed’s rate cuts were vital to unfreezing credit and ensuring banks and clearing houses would have access to liquidity they needed, while the market was under severe stress. - The second occasion was the rate cut in 1998, when stocks were reacting to the collapse of Long-Term Capital Management (LTCM). - There was fear in the market that this collapse would lead to a domino effect, ending in a banking meltdown. - Generally, when people fear a banking contagion, liquidity in interbank funding markets dry up. - The Fed’s action to cut rates during this time helped keep money moving, and ensured that banks met their regulatory obligations. Market Psychology - In order to understand the recent discussion revolving around the importance of the Fed’s actions, we need to understand human nature. - People love finding narrative threads and grand explanations because we’re biologically wired to make sense of the world that way. - They confuse correlation and causation, and zero in on evidence that supports their view and shuns whatever suggests otherwise. - But it’s important to remember that in most cases, a fact that everyone knows, tends to be closer to myth than reality, and even if it weren’t a myth, the fact that everyone knows it does not give us an edge in the market. Summary Market shocks are caused by surprises. News about a pandemic or cyber attack that catches investors off guard is much riskier than macro events that are predictable and can be anticipated. Given that the markets are efficient (which I believe they are), it's rational to assume that news about the Fed's rate hikes, and people reaction to it are already priced in. While short term volatility is definitely expected, I believe that the likelihood of this event becoming a trigger for a multi-year recession is extremely unlikely. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
TVC:IXICEducation
by Michael_Wang_Official
61
EUR/JPY Outlook (11 March 2022)Overall, EUR/JPY is trending downwards. Recently, EUR/JPY bounced off the support zone of 127.500. The European Central Bank (ECB) held its monetary policy unchanged during its meeting yesterday. The central bank sent out a hawkish tone when it announced that it will speed up its QE tapering if the eurozone economic data warrants it to do so, potentially ending bond-buying during the third quarter of 2022. EUR/JPY’s next support zone is at 127.500 and the next resistance zone is at 128.500. Look for short-term buying opportunities of EUR/JPY.
Long
by JinDao_Tai
1
EUR/USD Outlook (11 March 2022)Overall, EUR/USD is trending downwards. Recently, EUR/USD traded into the support zone of 1.10000. The European Central Bank (ECB) held its monetary policy unchanged during its meeting yesterday. The central bank sent out a hawkish tone when it announced that it will speed up its QE tapering if the eurozone economic data warrants it to do so, potentially ending bond-buying during the third quarter of 2022. Currently, EUR/USD is testing the support zone of 1.10000 and the next resistance zone is at 1.12000. Look for short-term buying opportunities of EUR/USD if it bounces off the support zone of 1.10000.
Long
by JinDao_Tai
1