The entire market is relying on stimulus to pass. It is so evident that if the stimulus does not pass before elections, we will ultimately see the downtrend continue.
It looks like we had a bull trap and and a potential island reversal pattern after the breakout from the falling wedge. We closed above the 50 day MA but then fell right back below it after the news about President Trump contracting Covid. The SPX managed to rally on some of the worst news in months. Continued rise in Covid cases across Europe, layoffs increasing, and the president contracting Covid. We had some good news with the non-farm payroll data but nothing significant in my opinion. The only thing keeping people bullish is more stimulus, and for good reason.
We are in a precarious situation right now and I expect a lot of traders/investors to be caught on the wrong side of the market. Be diligent, be patient, watch price action, and act accordingly. Do not be bias any which way because there is still very little clarity. If everyone gets bearish, we could see a massive short squeeze if the stimulus passes. I think there is more bearish indicators than bullish, but I will not place a trade until there is clarity.
As always, I am not a financial advisor and this is not financial advice. Do your own research and formulate your own theories. Good Luck!
It looks like we had a bull trap and and a potential island reversal pattern after the breakout from the falling wedge. We closed above the 50 day MA but then fell right back below it after the news about President Trump contracting Covid. The SPX managed to rally on some of the worst news in months. Continued rise in Covid cases across Europe, layoffs increasing, and the president contracting Covid. We had some good news with the non-farm payroll data but nothing significant in my opinion. The only thing keeping people bullish is more stimulus, and for good reason.
We are in a precarious situation right now and I expect a lot of traders/investors to be caught on the wrong side of the market. Be diligent, be patient, watch price action, and act accordingly. Do not be bias any which way because there is still very little clarity. If everyone gets bearish, we could see a massive short squeeze if the stimulus passes. I think there is more bearish indicators than bullish, but I will not place a trade until there is clarity.
As always, I am not a financial advisor and this is not financial advice. Do your own research and formulate your own theories. Good Luck!