S&P 500: Downtrend Begins in May
Greetings Traders:
The next 2 weeks will be a pivotal time-frame for the market. I believe we have finally entered into the downtrend phase. As you can see from my chart, Volume has steadily decreased for the past 6 weeks while the price of equities has been moving up - this is a Bearish Trend. The KEY .618 FIB Retracement level (2935) and 200 MA (2985) is currently in play and the Bulls are already receiving strong resistance. This will be the real test for the FED, and in order to push through it, the FED will need to pump a few Hundred Billion dollars into the market within a single session.
A couple of things to look at. I have been saying for a while now, that a key indicator would be the bond market. We are getting very close to negative rates. Once these start flashing all red, this would be a major single that liquidity is leaving the market. The 2-year flashed negative yesterday and rates have been inverting regularly now. If I had to guess, we are close to seeing all of them flash negative within the coming days. Keep an eye out for this.
BONDS:
US 3-MO / 0.106
US 1-YR / 0.17
US 2-YR / 0.215
US 5-YR / 0.377
US 10-YR / 0.616
Volume Significance:
Volume / Price / Interpretation
Increasing / Rising / Bullish
Decreasing / Falling / Bullish
Increasing / Falling / Bearish
Decreasing / Rising / Bearish
So to conclude, it is my purview that in May we'll see the 2nd leg down. My low target is somewhat broad, and this is due to the uncertainties of future FED Stimulus and the strong possibility of re-infection and a 2nd Quarantine.
My S&P 500 targets are as such:
HIGH: 2000 (No 2nd Quarantine)
MID: 1800 (Minimal increase of COVID-19, but still trending down)
LOW: 1400 (Large re-infection rate & 2nd Quarantine)
Lastly: Always remember, FED Stimulus & Bailouts can help prop up a market, but it can never take you to new highs.
The next 2 weeks will be a pivotal time-frame for the market. I believe we have finally entered into the downtrend phase. As you can see from my chart, Volume has steadily decreased for the past 6 weeks while the price of equities has been moving up - this is a Bearish Trend. The KEY .618 FIB Retracement level (2935) and 200 MA (2985) is currently in play and the Bulls are already receiving strong resistance. This will be the real test for the FED, and in order to push through it, the FED will need to pump a few Hundred Billion dollars into the market within a single session.
A couple of things to look at. I have been saying for a while now, that a key indicator would be the bond market. We are getting very close to negative rates. Once these start flashing all red, this would be a major single that liquidity is leaving the market. The 2-year flashed negative yesterday and rates have been inverting regularly now. If I had to guess, we are close to seeing all of them flash negative within the coming days. Keep an eye out for this.
BONDS:
US 3-MO / 0.106
US 1-YR / 0.17
US 2-YR / 0.215
US 5-YR / 0.377
US 10-YR / 0.616
Volume Significance:
Volume / Price / Interpretation
Increasing / Rising / Bullish
Decreasing / Falling / Bullish
Increasing / Falling / Bearish
Decreasing / Rising / Bearish
So to conclude, it is my purview that in May we'll see the 2nd leg down. My low target is somewhat broad, and this is due to the uncertainties of future FED Stimulus and the strong possibility of re-infection and a 2nd Quarantine.
My S&P 500 targets are as such:
HIGH: 2000 (No 2nd Quarantine)
MID: 1800 (Minimal increase of COVID-19, but still trending down)
LOW: 1400 (Large re-infection rate & 2nd Quarantine)
Lastly: Always remember, FED Stimulus & Bailouts can help prop up a market, but it can never take you to new highs.
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