not bullish or bearish, but to wait for a "buy" signal to indicate that
stock market investors have reached a nirvana.
Governments of various countries have socialized the losses, but keep their profits secret. The establishment of American society is to obtain endless profits in the stock market. This is suitable for the rich and the 401 (k) middle class.
There is an implied "investment" (prevention of losses) in the stock market: if the situation deteriorates, the Fed will start buying stocks. The Fed announced that it will purchase corporate bonds and municipal bonds in addition to national debt.
Besides the Fed, what other potential good news is there?
According to a report from scientists at the University of Oxford in the UK, they will conduct a coronavirus vaccine test on more than 6,000 people by the end of next month. If successful, they plan to provide millions of doses of vaccine by September. Such rapid progress may result in explosive assembly (on top of the current assembly). See "Coronavirus treatment will be priceless and worth about 5,000 points in the Dow Jones Industrial Average".
Does this mean you should buy stocks quickly? The answer is no. "Let's explore with two charts.
For both charts
, please click here to view the annotated chart of the Dow Jones Industrial Average ETF US: DIA, which tracks the Dow Jones Industrial Average US: DJIA.
Please click here to view the annotated chart of the S & P 500 ETF US: SPY, which also applies to the S & P 500 US: SPX.
Please note the following:
• The first chart is once a month and provides a longer-term perspective. This chart should always be the starting point for any stock market analysis.
• The second chart is a daily chart that provides a short-term view of the stock market.
• Stock market investors should conduct analysis in multiple time frames. See "The biggest mistake for stock market investors-can't expect it."
• RSI (Relative Strength Index) represents the internal kinetic energy of the stock market.
• The first chart shows that the RSI indicated by the green line has left the oversold area, while the orange line has been crossed and a buy signal is about to be issued.
• The first picture shows that the stock market is at the bottom of the resistance zone. Historically, the market tended to correct after a slight penetration.
• The second picture shows the RSI divergence. In simple English, this means that when the stock market goes up, the RSI will be lower than the previous high. In the short term, this is negative.
• The second picture shows that the volume is decreasing. This is negative.
• The second graph shows that the stock market is trying to break through the mini resistance. Breakthroughs from similar patterns usually fail.
What does it mean?
In the long run, printing and lending money are unsustainable and pose serious risks. Economic opening is good news, but unless there is a successful vaccine, the road ahead is not smooth.
Investors should remain agile and pay attention to the response to the earnings of the five major technology leaders: Amazon: AMZN, Apple: AAPL, Microsoft: MSFT, Letter (United States): GOOG (United States): GOOGL and Facebook US (FB)- And refuse to fall into a fixed bullish or bearish view.
This last point is important. Based on my 30 years of market experience, I suggest that investors should not be bearish or bullish, but should be evaluated when evaluating data. When stocks and ETFs enter the buying area, investors should follow the so-called protective band framework and make strategic purchases. In addition, transaction-oriented investors should consider taking advantage of short-term trading opportunities when setting up correctly. Please refer to "Stock Investors Ask 'Should I Buy or Sell?'".
News reference: https://www.marketwatch.com/story/sp-500-charts-are-telling-stock-investors-to-downshift-into-a-slower-gear-2020-04-28