Replies to post #729 on Awesome Stocks

[gfp927z]

Bigworld, Yes, closed back above support, so for now key support has held. It also left a bullish hammer type candlestick, which is often seen at bottoms.

So the current setup is for a bounce, though how long/how far the bounce goes we'll have to see. Fwiw, I'll probably watch from the sidelines, though it might be worth a trade depending on what happens tomorrow and Wed. I'm still thinking that a test of 3850 happens at some point in the May/June timeframe, so a trade would have to be in and out within a few days/week, or couple weeks.

How the market responds may depend on Powell's forward guidance on Wed. Very little doubt that the June meeting will also be for 1/2 point, but if Powell sounds like a hawkish grizzly bear then the stock market probably breaks support and heads to 4000 and 3840 by the June meeting. If he sounds hawkish but flexible, then a milder response. Per Dudley, the Fed may want the stock market significantly lower to help them quash inflation, so their preferred target may be closer to the 20% bear level (3840). Just a guess though.


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[gfp927z]

Well, there's the bounce, so next question is how long does it last? The obvious upside target on the chart is the 50 MA, which for the S+P 500 is 4374. Prior to that would be the 4300 level, which was the high last Thurs. So those should be the initial targets to watch.

Looking at the bigger picture, Rickards had some interesting comments on the China lockdown situation. He pointed out that President Xi is due to get his 'President for life' designation in November, and a key part of his motivation for the ultra-strict lockdown policy is to avoid an out of control health crisis in China that could derail his ascension to 'President for life'.

But the strict lockdowns are jeopardizing the Chinese export economy, so Xi is walking a fine line, and the big loser is the global economy, which relies so much on Chinese exports. The global battle to contain inflation is also made a lot harder by the Chinese lockdowns.

Anyway, I may just sit this market out, and not try trade these short term rallies. Probably not worth the risk and aggravation, especially when cash and T-Bills are finally paying a decent return. Then re-evaluate when the S+P 500 gets down to the 20% bear market level (3840), which seems likely at some point.


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