A1 Trading Company

Ticker tape by TradingView

May 29, 2020

The Bulls and Bears of Wall Street

Frank Cabibi

The Pandemic and US-China Relations

Overview

In 2019, the US and China were in constant feud over trade negotiations regarding the stealing of US intellectual property and increased tariffs on US and Chinese goods. These negotiations led to a considerably volatile market and became a dangerous, but somewhat predictable time for traders. After almost a year, feud sparked up again amid Washington’s legislation to delist a number of Chinese stocks from the American Stock Exchanges. Investors are worried that the same volatility will return in this fuming debacle.

SPX500 compared to the movement of the US30.

A number of concerns loom over investor sentiment that leave most traders with mixed feelings. Some prevalent issues include:

-$14 million in household debt
-Consumer Spending at a record decline of 13%
-The pandemic that shut down the economy for over a month hurt and even destroyed small and med businesses
-Lifetime bull, Warren Buffet selling millions of dollars of assets
-Analysts worried of economic recovery taking longer than planned
-38 million in jobless claims

The Bulls

These problems have stirred fear throughout the economy as the Fed does whatever it can keep prices increasing through printing money and monetary policy. Interest rates are almost zero, leaving almost no motive to keep money in the bank. Interest rates are very close to zero. And when people can’t make good interest on their money in a bank, they’ll move it into things that do (like the stock market).

The US is also planning on delisting a number of Chinese stocks from American Stock Exchanges once legislation is passed. Some investors argue that cutting China off from US exchanges will cause more demand for American stocks, and people will not look to invest in offshore companies but in their own.

The Bears

From the concerns I listed above, investors cannot understand the current valuation of the market, even if this is just a temporary problem that will go away in the future. The P:E ratio is not supported by projected revenue, and the market looks to be very overvalued. CNBC’s Jim Cramer believes that a quick recovery isn’t appropriate given the situation at hand, and the recovery will take longer than expected.

What Now?

Between the fed’s support battle to prop up the economy and US and Chinese tensions getting worse, the market is very mixed. Right now, the SPX500 broke above the 200 DMA and the US30 is struggling to close above it. President Trump is speaking today in a press conference which started a sell off and slight recovery in market prices. If we see negotiations end poorly (increasing tariffs), we may see the bears walk away with profits. As of now, sentiment is pretty low and analysts are expecting some short selling in the meantime. Others are also expecting a drop in prices for the long term to level out our Price to Earnings ratio.

Thanks for reading! In our community we have chatrooms, trade alerts from our top traders, and educational content. You can join using the link below, and get a discount on your membership.

https://a1trading.com/vip-membership-m/

Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

A1 Edgefinder

#1 Market Scanner Tool
Take 10% off using code "READER"
GET ACCESS NOW
Want to See Our Trades?

Join The VIP Community!

Our entries, exits & analysis
Live Webinar Coaching
Trading Chatrooms
Strategy Library 
Exclusive Trading Guides
Use Code "READER" for 10% OFF!
JOIN NOWJoin FREE Discord
Listen to More Episodes
Even More Bullish USD News

This morning at 8:30 am Eastern Time, the United States’ Bureau of Economic Analysis released even more bullish USD news. The Core Personal Consumption Expenditures (PCE) Price Index, which measures changes in prices for consumers (excluding volatile food and energy prices), rose more than expected month-over-month. A 0.5% increase was expected for August, with 0.6% […]

Read More
Historic Peril for the Pound

A strange series of events recently sent the United Kingdom’s Pound Sterling tumbling to historic lows. Just weeks after the death of Queen Elizabeth II (a head of state who was uniquely well-liked among the UK’s population by contemporary standards) Kwasi Kwarteng, Britain’s new chancellor in recently appointed Prime Minister Liz Truss’ administration, issued a […]

Read More
Get Ready for the Bear Market

Last week’s selloff was brutal for investors in the US stock market: the Dow Jones Industrial Average closed at its lowest level since late 2020, falling to 29590.41, losing 1.6% on Friday alone. With the S&P 500 currently down a whopping 23% from January’s highs this year, and other indexes close behind percentagewise, stock market […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
Home
Edgefinder
VIP
Menu
homesmartphonelaptopmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram