Featured Photo From: https://assets.cmcmarkets.com/images/sg_uncertainty_170517_large.jpg
This might be one of the most confusing and nonsensical times in the stock market. Global currencies are extremely volatile and no one seems to know what is going to happen next. Setting aside logic, US indices seem to keep climbing in one of the fastest recoveries in stock market history. And this is based off what exactly?
My concern is that there are no bullish cases that outweigh the enormous amount of debt carried by the US for printing trillions of dollars, unemployment at record highs, GDP projected to be record drop of 50% in Q2 (which is a ridiculous number), and private sector job losses projected to be 9 million.
Here is the Congressional Budget Office's projections for the rest of the year:
In the same way investors panicked and sold millions of shares in early April, the V-shaped recovery we're seeing is the produced by panic buying. There is still confusion around everything and now FOMO has taken over logic. When investors see the fed-fueled Dow Jones climb 200 points a day, they can't help but to join in to keep from missing out on these big moves. At the same time, confidence is very mixed and uncertainty is rising. The recent sentiment has been to rely on the fed for every little bump in the road and ride on the coattails to profits. The fed was designed strictly for monetary policy; it was never intended to be able to buy stocks on a seemingly unlimited balance sheet, but that is what it's come to after the 2008 financial crisis. Now we have traders and investors alike pooling their money into an endless ocean of artificial wealth called the stock market. That might sound nice, but there are some serious problems that come with that. One, inflation rates will rise due to the overprinting of currency. And two, debt levels will increase as well. Our economy is in a hot mess right now, but the market doesn't reflect that.
Price to earnings ratios are grossly high as companies who generated no profit for over a month are priced around when they did make profit. According to the chart, we have not been overvalued, but in a bubble for years now. We're too high, and performance can't back it up.
Because shorting is so hard to time, it makes it hard to wait with your money on the sidelines. Buying might seem attractive considering that the market has done nothing but move up since the pandemic crash. But the right move may not be to buy now. If you are seeing some big gains in your portfolio, you may be wondering why. And trust me, so is everyone else.
The rally doesn't seem to end with US equities, as fears, bankruptcies, riots, unemployment, and GDP continue to get worse. US30 is now about to face a big test against its 200 DMA as RSI climbs close to 70. In further news, according to Yahoo Finance, economists expect private sector job losses to be 9 million this month. Looking technical, if US30 touches the 200 DMA, we could be looking at some serious short interest on the index and all major US indices.
XAU/USD did end up coming off highs and pulling back to the downside as global stimulus measures are being discussed. As a result, investors look to gold and USD as safe havens for the economic recovery phase. However, gold prices dropped due to the concern of the federal stimulus package wrapping up. Gold currently touching support at $1701, RSI down to 45.
Hope you enjoyed! If you are interested in joining our trading 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.
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.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
Today's economic figures came out in US and Canada. GDP came in higher than expected in Canada while the price of goods purchased by consumers was lower than last month. Here are some pullback ideas for USD and CAD from GDP and PCE numbers. EdgeFinder Analysis NAS100 is a bullish reading on the EdgeFinder still. […]
This week has brought more inflation data with it regarding the USD's PCE and PMI numbers. Powell is also set to speak this Friday about monetary policy going forward. The RBNZ will also release their latest interest rate news tomorrow with expectations of an unchanged rate at 5.5%. EdgeFinder Analysis GBPUSD is a bullish bias […]
This week is a big PMI week for Europe, UK and US. Additional inflationary metrics will add to the overall sentiment of these countries' monetary policies going forward. Here are some setups for the coming week on these currencies. EdgeFinder Analysis GBPCAD is now a +7 on the EdgeFinder as we wait for CPI news […]
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
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.