S&P vs Russell 2000

2020年9月6日

Hello traders and analysts,

Here is our take on the S&P 500 and the Russell 2000 Small Cap.

It is important here is to note; that the peak of the hull for SPX has hit our island zone where price has shown a full retracement in the V shaped recovery and extended a little to provide great returns for long investors and over offered market conditions.
The cycle to us looks complete.

Note: This zone now between 3600 - 3400 is a strong supply but has potential to retest 3700 for the full Fibonacci extension.
however the signs with the volatility index and yields are now showing signs of clusters of building a nice level of discounted levels.
Where as the SPX, NAS and world indices are seeing over exposed with a strong imbalance.

Now we let the price and market show us where opportunities present itself to look for shorts.

Enjoy.

Fore more sub text - read below;
Technicals:
1. Looking back to 2000, 2008 - the dotcom, financial banking crisis and now 'Covid' - we can see a nice megaphone pattern which has emerged looking back since February 2018.

We have completed the the downward impulse of the wave pattern 1-5, with all waves forming without breaking the structure.
we are now in the minor wave 2 structure. and next up is the 5 wave corrective structure and looking to complete wave on the trendline .

2. From an imbalance method, we have a good double top retest which is showing profit and greed taking helped on from the Fed and using Fibonacci extension - price can over shoot to create an upper supply zone .
Price has seen a bounce back to 'normal priced of demand' however this is not really how halted economies can return so fast. it is artificial.
Divergence - we did not use this but looking at the pattern, we have a huge distinguishing gap. However this keeps widening - whilst we do not look at the divergence indicator, it does show a good area for sells - and according to RSI - we are not there yet technically speaking 80 zone is a major sell.

3. Looking at the VIX - the dollar is weakening to a 90-91 lows - however the buying of this at the lows will produce huge rewards. Check out or Vix for long inverse

4. Looking at Russell and SPY has the gap to fill to $340.00 per share , is this sustainable growth which is being propped up - with earnings quarter now in play, we will see those numbers finally provide profit targets either severely missed or the few will beat earnings .


Fundamentals:
US election rallies before taking place at the end of the year with campaigning - enter volatility state
We have NFP numbers showing millions return to work.. but also high unemployment still looming.
Trade war with China, Hong Kong unfolding with US responding - constantly..
High figures in multiple states which are concerns for large communities- record numbers still being released
Fiscal intervention in July, August for stimulus.. constant printing money is not good for the economy.
US tech stocks have seen the highest returns and zero confirmation by Dow30 and S&P following suit. - will this last? no.. billionaires just adding wealth, SME businesses not receiving the correct funding at all..
Dow 30 is in a fragile state and desperate to keep pushing higher but limited upside will cause a steep decline - refer to Dow chart.. around 28,500 is a good point for a previous monthly high but it may fall over at 28000 tops. - this is now being challenged
Crippling 1trillion money printing exercise to be released to prop up false growth. enter sovereign debt crisis

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10 years combined experience in capital markets
simple breakdowns for beginners to advanced .
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we trade purely from naked charts, less indicators - remove the noise. The reason for these charts is show the detail behind the thought process.


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