EUR/USD:SELL Following US Indices Set To Break Yearly Lows SHORT
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EUR/USD After Reaching your Target on the previous Idea ( Link in description ), the price, moved from the fundamental news about Inflation, seems ready to drop more without support...
So far, the problem is obvious. Inflation will take longer to rise than expected. The same goes for the Fed's plans to raise rates. Forecasts for both the economy and income are moving in the wrong direction - and fast. In response, the appropriate multiplier to be applied to declining earnings is also changing.
In short, the bear market is back, and the summer rally that gave hope that we were over the worst has been wiped out. Completely.
The S&P 500 is down 23% for the year, the Dow Jones Industrial Average is down 19.6%, and growth funds have lost 31.3%. Oh, and for those doing the math, the ARK Innovation ETF is down 70% from its high again, which requires a rise of about 230% from this point to get back to the glory days. Such is the case.
While U.S. futures have managed to bounce back after a few rough days, there is no fundamental or technical basis for a market bottom yet. Thus, expect the downtrend to resume.
More on the fundamentals later, but given the lower highs and lower lows, not to mention all the other bearish technical indicators, it is better to look for short positions in the indices now than long ones, even if the markets are a bit oversold in the short term.
With that in mind, there is a good chance that the S&P 500 futures and European markets will not be able to hold their current positions or, at best, move significantly higher from current levels.
In fact, after yesterday's bounce, the S&P 500 futures came up to a key short-term resistance area, the base of which is at 3723. Previously, that area was support in mid-July. But after Friday's drop, that area will now be the first line of defense for the bears.
Since the Dow has already hit a new yearly low, it is likely that the S&P and Nasdaq will follow suit. So the S&P futures are headed below the June low of 3639, where people who were buying yesterday on "support" placed their stop orders. On a sharp move, those stops are likely to trigger. So watch out.
It's not a matter of being permanently bearish, just that there is no good fundamental reason for investors to go long just yet.
Our Idea on EUR/USD following the US Indices is about a new push down by the price. Can the EUR/USD stop its rally to the bottom of the market?
So far, the problem is obvious. Inflation will take longer to rise than expected. The same goes for the Fed's plans to raise rates. Forecasts for both the economy and income are moving in the wrong direction - and fast. In response, the appropriate multiplier to be applied to declining earnings is also changing.
In short, the bear market is back, and the summer rally that gave hope that we were over the worst has been wiped out. Completely.
The S&P 500 is down 23% for the year, the Dow Jones Industrial Average is down 19.6%, and growth funds have lost 31.3%. Oh, and for those doing the math, the ARK Innovation ETF is down 70% from its high again, which requires a rise of about 230% from this point to get back to the glory days. Such is the case.
While U.S. futures have managed to bounce back after a few rough days, there is no fundamental or technical basis for a market bottom yet. Thus, expect the downtrend to resume.
More on the fundamentals later, but given the lower highs and lower lows, not to mention all the other bearish technical indicators, it is better to look for short positions in the indices now than long ones, even if the markets are a bit oversold in the short term.
With that in mind, there is a good chance that the S&P 500 futures and European markets will not be able to hold their current positions or, at best, move significantly higher from current levels.
In fact, after yesterday's bounce, the S&P 500 futures came up to a key short-term resistance area, the base of which is at 3723. Previously, that area was support in mid-July. But after Friday's drop, that area will now be the first line of defense for the bears.
Since the Dow has already hit a new yearly low, it is likely that the S&P and Nasdaq will follow suit. So the S&P futures are headed below the June low of 3639, where people who were buying yesterday on "support" placed their stop orders. On a sharp move, those stops are likely to trigger. So watch out.
It's not a matter of being permanently bearish, just that there is no good fundamental reason for investors to go long just yet.
Our Idea on EUR/USD following the US Indices is about a new push down by the price. Can the EUR/USD stop its rally to the bottom of the market?
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