Markets tested the June lows 5 times and did not decisively break through these and remained relatively orderly with the forward VIX remaining below the cash price. It would seem that unless a black swan happens, Francis Stacey and Ray Dalio S&P 3,200 and possibly 2,500 predictions might not materialize. I see a scenario where the post-March20 ludicrous valuations have been flushed out and markets are now behaving as they did pre-pandemic: slightly overvalued but stable. No one is calling a bottom here but it appears that we might be close to it failing a black swan event. I entered additional shorts during the 28th rally and now looking at the DOW's 28,500 level to close the shorts and a buying opportunity.
Trading the Indices on Fundamentals
- Thread starter FXtrader8911
- Start date
So your indis are news (interpretation) and VIX only ? What about bonds ?
Well, you tell me... Here's a 5-year bond chart, I get nothing out of it. What do you see that could be applied as a forecast to the Indices?
Overlay SP500 and T-Notes in the hourly chart ?
After a few days of lower lows, Tue rally was awaited. The Buffett indicator has risen from 141% to 153% possibly indicating new rounds of lows are coming. I managed to lift my shorts to a more elevated level putting my position in a good place for the anticipated sell-off. I will still be looking to enter new longs at around the 28,500 (DOW)
Have we seen the bottom? Yes say the algos that caused Thu 1,530pt DOW upswing, No says the human traders that believe the upturn was caused by a sigh of relief when the BOE clarified the confusion over the bond safety net abolishment. Traders still say the VIX hasn't broken 40 so panic and capitulation is still to come. My view? judging from the fact that traders have remained calm and disciplined without much panic at each FED rise, I think today's lows will retest but maybe these will hold with the S&P unable to brake -30%, but then a geopolitical or oil or a Powell black swan could happen so the best is to remain cautious. I took profit on the shorts but did not enter longs as my 28,500 DOW target wasn't reached. We are in interesting and unchartered times.
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Looks like the Twitter deal in going through, Musk has been nick-named "the chief twit"
The Buffett Indicator has crept up to 160% from the year-end of 148%, still below the 210% early 2022 level but many are saying 2021/2022 exuberance is creeping back with the likes of Cathie Wood's $3t Tesla and $1m BitCoin crap that's spurring on the retail traders. Markets are overvalued and expected to see a correction when markets and Fed get into sync.
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AI Frenzy? It feels like late 2021 again where multiples are increasing and pushing stock prices up on fumes rather than earning. Time to be cautious again because valuations do matter, fundamentals & potential headwinds are not justifying current levels and the 2 clowns, Powell & Yellin, are still in charge of fiscal policy. EU & Asia also getting caught up in the AI frenzy. NIKK225 at a 33-year high, DAX, CAC & FTSE close to ATH.
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