It's time to be bullish on US stocks in near term, this trading stratege you must know

Ivan_Gan
2022-05-31

On Thursday night, the minutes of the Fed's meeting on interest rates were released, which was basically in line with market expectations.

It has become the consensus of the market to raise interest rates by 50 basis points in June and July respectively. What surprised the market was that some officials of the Federal Reserve announced that they might stop raising interest rates in September, which brought a shot in the arm to a dead stock market.

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First, the impact on the US stock index

"Believe it or not, I believe it anyway", which is the attitude given by the market, so the US stock market rebounded at the bottom. As the market has fully expected the Fed to raise interest rates by 50 basis points from June to July,

Between now and the September meeting, Raising interest rates is no longer the biggest negative for US stocks, and the biggest negative can only wait until the interest rate meeting in September (if the Federal Reserve decides to continue raising interest rates in September, it will exceed market expectations and the stock market will weaken immediately).

Therefore, the current time period (before September) can be described as the safest time for bullish fundamentals, and the stock market is naturally relatively stable.

​Technically,U.S. stocks have risen above the 20-day moving average last week, so they should no longer be bearish. At the same time, the low point occurred in May.

In view of the time characteristics of U.S. stocks 2-5-8-10, it can be considered that this point is the watershed of the future bull and bear market, and it will continue to be bullish as long as it does not innovate low. The strategy is also simple, buy the lowest put option protection, then hold the long stock index futures or the long stock, and let the market toss about the rest.

Second, crude oil

The Federal Reserve no longer raises interest rates, which is good for commodities besides the stock market. At present, the contradictory logic of the market lies in the fact that because the stock market falls, large financial capitals think that the Federal Reserve does not dare to raise interest rates sharply to suppress inflation (for fear of accidentally hurting the stock market), so as long as it does not raise interest rates, inflation will continue to be unsolvable.

Because commodities have just-needed attributes, as long as there is no substantial increase in additional supply, mine owners can always wait for the price, and the demand side is forced to passively accept it. Therefore, it is very difficult to raise interest rates and suppress commodities and inflation while leaving the stock market unscathed. Can the Fed stand this test? We can only wait and see, but as far as the current supply and demand of commodities are concerned, the market expects that if the Federal Reserve will not raise interest rates, it will be difficult for commodities to fall.​​

​There is still no change in the technical side of crude oil, neither falling through the important moving average nor major news. Therefore, bullish friends continue to hold bulls and wait for reversal signals.

For those who want to short, please wait patiently, and stay up for another two months to usher in an important moment (September). Although the oil price will rise at a lower rate, it is difficult to short against the trend, so please be patient. When it effectively falls through the 60-day moving average or the 10-week moving average or the May moving average, let's arrange short positions again.

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Comments

  • Oldhead
    2022-06-01
    Oldhead
    It is too soon as economic outlook is still very uncertain.
  • dragon dog
    2022-06-01
    dragon dog
    show hand time my friends
  • iImba
    2022-06-01
    iImba
    hmmm don't get trapped
  • noobiee
    2022-06-01
    noobiee
    Is a roller coaster ride
  • StreetCat
    2022-06-01
    StreetCat
    Must still be cautious 🙏
  • Kyesu
    2022-06-01
    Kyesu
    Read and thanks. I think the market is alright for the time being.
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