Good morning everyone!
I'm joining today the MT5 family and I am really happy to be a part of it.
Next days, I will start sharing posts on technical analysis and also with daily reports on all relevant market updates. That is why I am going to give you an analysis where I will show you a strategic approach for trading and investing. Let's start with the risky assets the US stock indexes.
The SP500 rose shy of 500% (and the Nasdaq by an astonishing 680%) since the lowest levels during the Great Financial Crises.
Let's have a look at 2019 approx gains till 15/11:
SP500: 25%
DowJones30: UP 21%
Nasdaq: UP 31%
These are incredibly high returns if you think that a long term average since 1930 is approximately not far from 10% per year.
The main drivers of this raging bull market are:
- Easy Liquidity from Central Banks (still going on)
- Price to earning expansion (on improved cost structure, technology, and low inflation)
- Corporate Buybacks (especially in the US, sowing down)
I will be back to these points in the next days: today, let's have a look at some charts, starting with the NASDAQ WEEKLY one.
It's probably difficult to see something bad with this steady uptrend that brought the price to the new record highs. However, you should pay attention to the following sentences :
- How the price is now compressed in a wedge, close to the upper dynamic resistance (also to the upper BB band)
- How the trend starting in 2019 has been tested (and pierced) many times since the late Q2 (a sign of fatigue?)
- How the RSI is clearly diverging since early 2018 (in my experience, it always takes a lot for any divergence to be reflected on price movement)
Have you noticed the 7 consecutive weeks of gains starting in October? That coincides with the US Central Bank rushing to start its NO QE program for easing the ON Repo Market (providing liquidity to big institutions). This is a very important point to understand and I will be back on it in the next posts.
In my opinion, it will be difficult to see substantial gains in the next weeks/months as valuations could vary at this point.
In the next post, I will give my analysis of the SP500 DAILY CHART.
The Med Trader
The material has been provided by InstaForex Company - www.instaforex.com