Gold exceeded $2.000 per ounce. Stock futures rose on Wednesday as investors awaited further updates on stimulus talks.
S&P: 40% down?
Information is not investment advice
We are seeing now a retrace in the S&P – the decadent mood is once again reigning in the stock and Forex market. Investors are fearing the second wave of the virus and all other evils to come. Reasonable enough though – that is all out there among the possibilities, so the earlier the market factors in those disappointments, the better. But let’s make a purely technical analysis of the S&P and see if we can find a pattern.
On the below daily chart the recovery of the S&P after the disaster of February-March may be divided into three waves.
The first one started when the bottom was finally hit at 2,180 and peaked at 2,630 making a 450 points leap. After that, it retraced 180 points down to 2,450 erasing 40% of the gain. That is when the second bottom was being discussed – the people would not believe bulls would be powerful enough to sustain the upside.
The second wave launched at 2,450 and reached 2,960 making a 510-point leap. Then it erased 190 points dropping to 2,770 which is also nearly 40% of this wave. That is when observers were discussing the 50% level and were more confident there would be further rise although those professing the second bottom were still heard.
The third leg launched at 2,770 and peaked recently at 3,230 making another 460-point leap. As it was a complete recovery of the virus damage resulting to be a V-shape, observers got scared that it was too quick, too good, too unbelievable. Eventually, we are now at roughly 3,100. Is that it?
If the “methodology” behind the S&P’s movement stays, we are likely to see a 40% reduction of the leap that was made just like it appeared in the first two waves. In this case, we are likely to bottom out at 3000-3050 and then another wave up will launch. Let’s watch for the signs of a bullish reversal then and check that 40% down.
P.S. If those waves keep the pace, then the coming bullish leg will launch at 3000-3050 and make around 450 points upwards. That should complete in a couple of weeks so the end of June will show how precise our estimation is.
New COVID-19 cases globally have been on the rise lately, although it is too early to call them second waves in most countries.
With the pandemic claiming about 1000 lives a day in the United States, many departments said they lack the money and the staff to identify people who have been exposed, according to a survey of a 121 local agencies.
US stocks are set to open lower Friday, with investors worry over rising tensions between the US and China, deadlock over the next virus relief bill and possible disappointments from the key monthly employment report.
The pair was falling down amid the waning US dollar. However, the situation changed this month.
Dollar continues to keep firmer on the day, all eyes on the US jobs report later.