Can the market continue its rebound next month?

Submitted by City_Index t3_10pttp2 in wallstreetbets

Monday’s sell-off seemed to stem mostly from profit-taking rather than a specific catalyst driving a shift in sentiment. Traders were likely looking to reduce risk ahead of the Fed’s interest rate decision and Big Tech earnings this week.

The outcome of both will likely play a big role in determining whether or not this decline turns into a more sustained sell-off. However, the S&P500 currently looks like it could be in for another rejection from the key 4100 level. If disappointing earnings and a relatively hawkish Fed does trigger further selling, it will be interesting to see if SPX can hold support around its former downtrend resistance and 200-day MA. From a technical standpoint, this may at least signal that the index is actually building a sustainable recovery from the October lows.

Of course, all trading involves risk, but it will be worth keeping an eye on how this week’s events progress as volatility is likely to be elevated.

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token-eater t1_j6m7v74 wrote

Yeah dude the bull run started, load up on calls and ride the wave up imgimg

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CokeAndChill t1_j6ml5kz wrote

The sp500 it’s outright expensive with current earnings at 18x or so.

You have QT, rising rates, earnings going down and the fed telling you expensive assets are a part of the problem.

The only thing holding this market together is the pandemic liquidity injected in the form of credit, JPows bulging balance sheet and all the hopium in the air.

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Turbiedurb t1_j6n8rwo wrote

>The only thing holding this market together is the pandemic liquidity injected in the form of credit,

Lol wtf? 😆

Fund managers cash levels are at the highest levels since -09. The money is there but it sure as hell isn't propping up the markets like you're describing.

Here's some food for thought.

https://bakadesuyo.com/2010/09/do-we-perceive-negative-people-as-smarter-and/

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CokeAndChill t1_j6ng23a wrote

Liquidity in the form of credit is buying a car at 1% apy, nothing to do with fund managers.

I’m not a permabear but having some perspective never hurts. Look at the cyclically adjusted pe and consider the risk free rate!

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Turbiedurb t1_j6ni0mo wrote

>Liquidity in the form of credit is buying a car at 1% apy, nothing to do with fund managers.

And i never said it did.

Interest rates on car loans doesn't really crash the market tho. Sure the demand drops in the short term but people will still need to drive.

It's always wise to use several pieces of data to form an analysis.

I'm just saying that the historical difference in the data im pointing to is far greater then the one you're pointing to.

It's just a regular market cycle, but the cash on hand money managers hold is something different imo.

Bonds yields are still at relatively low levela, especially seeing as the market recently made new 52week lows.

Remember TINA?

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VisualMod t1_j6m7p2j wrote

>I agree that the sell-off on Monday was mostly due to profit-taking, but I think there is also a lot of underlying anxiety about the Fed's interest rate decision and Big Tech earnings this week. If either of these disappointments triggers further selling, it could be difficult for the S&P500 to hold its former downtrend resistance and 200-day MA. From a technical standpoint, this would signal that the index may not be able to sustain its recent recovery from October lows.

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MoondropS8 t1_j6mad41 wrote

If 2020 is your first experience with a market crash, I can see why you expect a V shaped recovery.

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Vandalmercy t1_j6m8bey wrote

We just did the roll landing, but there is another ledge we are just about to roll off of.

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VentriTV t1_j6mnq1d wrote

Most traders here never experienced the tech bubble of 2000, SPY took 7 years to recover and the QQQ took 15 years LOL, yup bull market incoming.

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Turbiedurb t1_j6n96qs wrote

What thing that caused the dot com crash is applicable in this situation?

>Most traders here never experienced the tech bubble of 2000

This is definently true, but my takeaway from it is a lot different than yours.

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Tyr312 t1_j6mnqkc wrote

No. Typically Feb is always red.

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VisualMod t1_j6m7oqm wrote

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Buck_Folton t1_j6mcxte wrote

> Monday’s sell-off seemed to stem mostly from profit-taking

To whom, other than profound morons, did it seem that way?

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Turbiedurb t1_j6n84wf wrote

>Can the market continue its rebound next month?

Obviously it "can" rebound, the question is if it "will" rebound.

To bad no one knows.

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