Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
S&P: a brighter future
Information is not investment advice
We have previously advised not to get too scared of a second-wave-caused stall in the stock market. Specifically, we suggested that 3 000 (2 980 to be precise) would serve as a likely bottom for the current sideways movement of the S&P and that this movement will be somewhat prolonged compared to similar periods in the previous several months. We are still maintaining that point. See the below chart.
We had periods A and B where the S&P made a similar stop with lower-highs chart formations. Each time, it preceded a breakthrough growth to a higher baseline level. Currently, we are in the C-section. Even if it transforms into a breakthrough right now, it will already become the largest drawback among the three. Nevertheless, it doesn’t change the market logic. In fact, naturally, the higher and the closer the S&P’s trajectory gets to pre-virus dynamic, the less steep the inclination of the curve will be.
Hence, it is only reasonable to expect that the current sideways channel may take even longer before it completely exhausts itself. For this reason, and optimistic scenario 1 suggests that the current bullish move will be the beginning of a breakthrough to yet a higher baseline level. In the meantime, a moderate scenario 2 suggests that somewhere on the way to the resistance of 3 230 there will a bearish reversal, which still will convert into an upward trend after it bounces from the support at 2 980.
The long-term and mid-term projections provided by observers lately give enough positive fundamentals to consider both scenarios as quite possible. For this reason, get prepared, it looks like we are in for a good season at the stock market and the S&P.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.