It ain’t pretty, is it? Here’s the S&P 500 over the last six months:
The chart is clear: the bottom around August 24 was not broken by the bottom at the end of September, so the market rocketed up. Until Friday, when the SPX closed at 1,880.29, breaking the previous lows. The last time the S&P 500 was this low was April 29, 2014, and then again on October 15, 2014. We are now in 2016, so that’s a long time with no gains.
So what’s next? That’s easy: it’s either up or down from here.
Breaking the floor is a problem, and with the markets in the USA closed on Monday, traders have three days to think about it. They may all return on Tuesday, and sell everything. Or the Bib Boyz may decide enough is enough, and grab bargains and drive the market forward.
A close for the week at new lows is not good. A betting man would say that a drop like this will reduce the market farther. The correction should continue.
But (and yes, there is always a but).
If the market bounces back on Tuesday, the close on Friday will be merely a test of the lows, but not a violation of them. This could be the point of the bounce. I don’t know.
Will then Fed intervene, and start buying stocks (or loan more money to JP Morgan et al to buy more stocks)? Does the government want a market crash in an election year? Do they want Donald Trump elected president?
No, no they don’t. They’ve now made money on the short side, creating lots of bargains, so now they may start buying.
I have no idea what will happen, but a rally from here would not surprise me in the least. I have closed out my short positions (at a nice profit, thank you) and I’m expecting a bounce back. But I’m not betting the farm on it; I’ve got lots of cash.
Fasten your seat belts, this is getting interesting.
And yes, Donald Trump will be the next president. Sorry. I don’t get a vote.
Thanks for reading; more next week.
The Bottom is In! (Or Not)
by JDH on January 16, 2016
It ain’t pretty, is it? Here’s the S&P 500 over the last six months:
The chart is clear: the bottom around August 24 was not broken by the bottom at the end of September, so the market rocketed up. Until Friday, when the SPX closed at 1,880.29, breaking the previous lows. The last time the S&P 500 was this low was April 29, 2014, and then again on October 15, 2014. We are now in 2016, so that’s a long time with no gains.
So what’s next? That’s easy: it’s either up or down from here.
Breaking the floor is a problem, and with the markets in the USA closed on Monday, traders have three days to think about it. They may all return on Tuesday, and sell everything. Or the Bib Boyz may decide enough is enough, and grab bargains and drive the market forward.
A close for the week at new lows is not good. A betting man would say that a drop like this will reduce the market farther. The correction should continue.
But (and yes, there is always a but).
If the market bounces back on Tuesday, the close on Friday will be merely a test of the lows, but not a violation of them. This could be the point of the bounce. I don’t know.
Will then Fed intervene, and start buying stocks (or loan more money to JP Morgan et al to buy more stocks)? Does the government want a market crash in an election year? Do they want Donald Trump elected president?
No, no they don’t. They’ve now made money on the short side, creating lots of bargains, so now they may start buying.
I have no idea what will happen, but a rally from here would not surprise me in the least. I have closed out my short positions (at a nice profit, thank you) and I’m expecting a bounce back. But I’m not betting the farm on it; I’ve got lots of cash.
Fasten your seat belts, this is getting interesting.
And yes, Donald Trump will be the next president. Sorry. I don’t get a vote.
Thanks for reading; more next week.