S&P 500 — will we see new highs soon?
Briefly: I still tend to think bullish about SnP market, but it is quite probable that we will see some lower levels before turn around (in a couple of weeks).
This week (9–15 of March 2020) was super-volatile, especially on Thursday (-9%) and Friday (+9%). Wow, such a swing! I think it is better to be aside from market in such days, because it maybe devastating for your nervous system :-)
Some retrospective: my last post about stocks where I suggested buying at 2954 could be useful if you considered that small growth as a correction (to 3130), but generally speaking I was buying too early.
So what do we have now:
- FED injected 1.5 trillion!!! USD into financial system and I think it is not the last injection. It is a clear sign for me that central banks are ready to ‘print money’ that is defenitely a plus for stocks.
- FED, BoE interest rates will be cut to its minimum values around zero. This is positive.
- China shows positive signs in fighting coronavirus, its industry comes back, that is also a plus.
- We’ve seen this week tensions between Russia and Saudi Arabia about oil production and it hit S&P market as well. I think that most of negative effects from ‘oil war’ are already in prices.
- Sentiment — most of traders are scared now. Ordinary people investing in stocks are scared even more. This is good for growth.
Elliot waves — as usual there is a plenty of various counts. My rating is:
A) This one looks most probable for me — fast panic sell-off and then fast pull-back to a new highs:
B) The second one, that looks also possible, but it will be invalidated if we go lower sharply:
C) An the third one, pessimistic one (I think it is less possible) — peaks are done and we are just at the begining of the downtrend:
Option C is possible, of course, but it the last in my rating because of 1–5 reasons above.
Some people find current market crash similar to the one in 1929, let’s see:
using this projection it seems that we will have a nice rally until autumn 2020, so it is also positive for mid-term buy.
So, to sum up:
I wouldn’t buy right now, but I would search for buy opportunities during next several weeks. My expectations are bullish — huge amount of liquidity will help stocks to recover and maybe even to show new all-time-highs. Of course we should avoid playing “all-in” game here because of scenario C.