Is This Just a Dead Cat Bounce?
The market looks like it wants to go bullish after several days after sharp selling last week. Is this the beginnings of a continuation to the upside? Or is this just a dead cat bounce? Get the up to date macro and technical analysis for the S&P 500 in this video. Feel free to like the video and subscribe to my YouTube channel. It would be greatly appreciated. Click the link below to watch the video.
Contributions to Today's Bullishness
There are a few things that led me to believe today would be a bullish day. Aside from the nice gap up in price overnight in the futures markets, there were some very positive reactions resulting from some lackluster earnings releases after hours the previous night. $Nike (NKE.US)$ and $FedEx (FDX.US)$posted mediocre earnings reports but the market still responded with a nice jump up in price before the market opened the next day. Positive earnings reactions coming from lackluster earnings reports is a sign of a bullish trend in my opinion. The day started off somewhat flat for the first 30 minutes until the first batch of economic data was released. Existing home sale data was bad and consumer confidence was good. Since we are in a "bad news as good news" environment the negative data from home sales pushed the market higher due to the facts that the FED might not have to keep interest rates higher for longer since the housing market is cooling off apparently. Thirty minutes later oil inventory data brought up the energy sector which push the market up even further.
Prophecy or Technical Analysis?
In the video that I posted yesterday about the S&P 500 I mentioned the closest long-term resistance level to watch during the day for some possible reversals or friction in price action. Today's very bullish upward price action slowed down started trading sideways at this resistance level. If you would have watched yesterday's daily update video then you would have been prepared for the slowdown and price action. You might have even found a great scalp trade from the thesis in the video. The price could possibly climb above this resistance level by market open tomorrow but this still would have been a perfect price point to take a little profit off of the table if you are a short term trader like myself.
Where is the Market Going Next?
Is this a dead cat bounce or is this the start of an uptrend? When you take a look back at the overall trend then you will see that the long-term trend is down, the short-term trend is up, and the immediate near-term trend is down. The market is in a difficult area to predict future price action. But since the long-term trend is down and the immediate-term trend is down I would think that this is a dead cat bounce. If this is a dead cat bounce then the market could very well climb higher before falling back down. When the direction is this tough to call then the only thing you can do is watch the technical support and resistance levels and see how the price action reacts before you make a decision. Or if you are bullish then you can buy the dips at support. And if you are bearish then you can sell the rips at resistance. Check out my YouTube video to get those technical support and resistance levels.
What to Watch Tomorrow
The major economic event that will more than likely move markets tomorrow is the jobless claims data release. This data releases before the market opens tomorrow so if you are holding any options and any big price moves happen in the market after the data releases then you may be stuck just watching at the edge of your seat until intraday trading starts. And remember that during this bear market the major indices have been very sensitive to economic data releases. So this will be an important data release as it could possibly effect the Fed's future interest rate hikes. The Fed wants to see bad jobs data. Bad jobs data will be bullish as it might sway the Federal Reserve to pivot away from the current interest rate hiking regime even sooner.
Do You Think This is a Dead Cat Bounce?
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$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $CSI 300 Index (000300.SH)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
$Chevron (CVX.US)$ $Phillips 66 (PSX.US)$ $Valero Energy (VLO.US)$ $Devon Energy (DVN.US)$ $Occidental Petroleum (OXY.US)$ $W&T Offshore (WTI.US)$ $United States Oil Fund LP (USO.US)$ $United Sts Brent Oil Fd Lp Unit (BNO.US)$ $Imperial Petroleum (IMPP.US)$ $Houston American Energy (HUSA.US)$ $Indonesia Energy (INDO.US)$ $BP PLC (BP.US)$ $Exxon Mobil (XOM.US)$
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Johnnie Worker : Buy when everyone is fearful. 2023 will be a very good year for stocks
MonkeyGee : we will know in 10 mins after the initial claims number comes out if this is a dead cat bounce.
SpyderCall OP Johnnie Worker : I would assume that next year will be a great year after a horrible year like this year. In my time in investing I have never traded through a red year like this. Luckily I made some money this year but I took a few good hits to my profile from time to time
SpyderCall OP MonkeyGee : you were exactly right. it killed the market. I was not expecting a big red move like this. Is the dead cat bounce confirmed yet you think? or is this a pump fake before we rocket to the upside?
what do you think?
MonkeyGee SpyderCall OP : don't know what to think anymore. thinking is what causes the problem. The Algo is out thinking everyone. This is a bot war!
SpyderCall OP MonkeyGee : you mary very well be right. because today is extremely low volume so far. Just like most days at the end of the year. Algos should be dominating the trading you would think. unless they turned off the algo machines for the end of the year
intuitive Jackal_354 : I think the whole fucking thing is a scam
AkLi : Thank you Spider for the analysis. However, I think keeping a sharp eye on precious metals would be a good play. My thoughts are top down. Whether Cars, Chips, Manufacturing; Housing, jobs, pay; I think that keeping an eye on precious metals will tell the story since they are the foundation, in my opinion. Those are my thoughts. I think that we might see some higher than expected, or maintained CPI or PPI for December. There is research that I have read which implies that although price of materials is cheaper, companies will still sell at the same inflated price due to their profits and psychology. Where we are now purchasing everyday 'necessities' for higher prices, we get used to those prices. A false joke being 'haha remember when this was that (cheap) price?'. Meaning that we are already, although against what we want to pay, "use" to spending that price. This is not always the case, say for gas, but companies want to take advantage of that and continue selling at these prices. Especially around the holidays where demand is much larger and spending of un-needed goods is increased. So we might see higher consumer spending, where the price is the same high, or just as high as it was during substantial inflation (not total, but maybe under but not as noticeable as gas in terms of being cheaper). Those are my thoughts, there is no TA around them, but I would love to hear your thoughts and have further conversations with you around more technical, perhaps referencing historical trends, for the month of December and what to expect for early 2023. My thoughts also imply market recovery in January, or February. People put a lot on their credit card in December, payment in January. Thank you for your time, Alkaline
MonkeyGee SpyderCall OP : very good points, hard to stand up with so many beat down for 2 years straight. just can't wait till 2024 for a real president.