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Market Predication and Notes

Mon Sep 30 2019
 
SPY 20190930    Action: Sell     Weight: 1     
 
Short SPY again if it rebounds back to 275 and ema_10_trend and ema_20_trend turn further bearish.
 
SPY 20190917    Action: Monit     Weight: 0     
 
Fed fund rate watch tool showed the probability was at 40.4% for a 0.25% cut at some point Tuesday evening and it was 100% a few days ago. Wednesday morning news came out the spike in fed fund rate was caused by repo liquidity, not the reduced market consensus for a rate cut. The tool sent a false signal and that's why the bond market and stock market didn't react to the dramatic change.
 
SPY 20190328    Action: Sell     Weight: 2     
 
The stock market often produces its strongest returns after yield curve inverts, according to well-known JPM’s Kolanovic. And a Seeking Alpha author even argues that Yield Curve Inversion Suggests New All-Time Highs For Stocks.

It's not hard to find out if they speak of true or just try to mislead investors by simply looking at the historical SPY data.

Lets look at the July 1, 2000 inversion first, SPY was down 11% 6 months later because the inversion happened after the the peak of the Internet bubble. For Aug. 1, 2006 inversion, SPY did go up another 20%% because it happened before the burst of housing bubble. The only way for SPY to hit new high now is that we're in final stage of another bubble.

Clearly what happened after the inverts were really ugly, not better than average return.

 
SPY 20190323    Action: Monit     Weight: 0     
 
If the high of 285 on March 21 was the completion of corrective rally (wave b) in the Trump rally wave structure, the first sub-wave 1 in wave c should be between sub-wave 2 (260) and sub-wave 4 (272.4) of wave b - the corrective rally driven by Fed police reversal. It's very likely SPY will hit 265 before rebound. Then it'll bounce back to around 270 before down to 240, then back to 250, then eventually down to 210-220 to complete the 5 sub-waves of wave c for Trump rally cycle.

More important to monitor and measure the progress than predict the price movement.

 
SPY 20190321    Action: Sell     Weight: 3     
 
The fall of SPY is inevitable starting March 21, 2019 for several reasons:

1. The probability of 0.25% rate cut by Dec. raised from 21.6% to 31.1% today. Source
2. Interest rate curve sharply inversed further today. Source
3. 10-year T-bond IEF increased sharply by large trading volume later March 20, 2019. Details. IEF has been -62% correlated to SPY.
4. CFTC speculative position was at -60K as reported last Friday.
5. Equities have been over-extended in past a few weeks.

Fund managers will sell equities to buy fixed income assets.

 
SPY 20190317    Action: Sell     Weight: 1     
 
Considering short SPY. It'll likely form a top in a few days. But watch UVXY.
 
SPY 20190203    Action: Monit     Weight: 0     
 
SPY shows little signs of slowing down. EMA20 trend is strong at 1.8%. LTI is over-extended at 2.1. It may takes another a few days to form the top. Sell SPY in two accounts once the signals are clear.
 

 
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