Equity markets were very heavy yesterday
Ichimoku Kinko Hyo EUR/JPY: The EUR/JPY pair is now testing the lower level of the cloud…
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.
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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.
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