As Japan and Britain began to rescue the market one after another, The dollar finally began to retreat from its high level
The US stock market stabilized, But the range of pull-up is not large, I think there will still be repetitions in the high probability, so I want to wait for a low point before trying to buy the dip. It is OK to establish a long position in this area, and stop the loss after breaking the previous low.
The turnover range of the two volume and price indicators mentioned in my previous article is not very large, so i look at a weak rebound here
The rebound rate of subsequent trends depends on whether these two indicators will cooperate with a sharp rise
Considering that this is a double dip in US stocks, The weak rebound is due to the previous low, Coupled with Japan and Britain's rescue of the market and the retracement of the US dollar, whether it can continue to rise depends on the changes in the US bond yield and the US dollar index. This is the key.
From a technical point of view only, at this stage, I tend not to think that this is a bottom, and the former low probability cannot be kept. After the weak rebound, S&P still has a long way to go down, but it is not much.
Look at this picture we shared before. If SP500 could kept stabilized when I buyed it before, the S&P will not continue to go down, but at present, the technology pattern is broken. I think the probability of a double bottom rebound is small
why do I think the S&P is not far down in the future？
Fundamentally speaking, the key point is the yield of US bonds. Except that the US dollar has been technically overbought for a long time ，the valuation of the yield of US bonds should have fulfilled the expectation of raising interest rates this year. Moreover, the US debt has been seriously oversold from the ‘boll’ index, and the decline from the peak is comparable to that during World War II, but this is not the point
The key point is that the unemployment rate expected by the Federal Reserve before, the unemployment rate in next year and the following year has been greatly increased, both to 4.4., and now it is only 3.8. The inflation expectation has also been greatly lowered, from 5.4 to 2.8. This is actually the Fed's prediction that next year will enter recession. Why is the interest rate futures market structure trend betting on the annual interest rate cut? This is also the reason
So the Federal Reserve said that a 125 basis point interest rate hike, Let's finish at about 4.5. This goal is out of reach with a high probability, Therefore, the difference between the federal interest rate and the 10-year US bond yield may have peaked at present.
As the recession expectation deepens, the 10-year US bond yield will peak and fall. This depth of inversion , the estimate given by CICC is about 50 bps, which is measured through historical backtracking.
If the end point of the federal interest rate is 4.4%, then the end point of the 10-year US bond should be 3.8, so from the current valuation of 2-year and 10-year US bond yield, it has exceeded the valuation. Very sufficient, the current yield is the peak, which is consistent with my previous analysis, and once again confirms the data back test results in our previous paid content, and predicts that the price of US debt will bottom out in October.
Therefore, as long as inflation peaks and the possibility of recession increases, US stocks can see it Bottom. However, it will take some time for this pricing logic to land.
There will be a short-term rebound, which can be seen from the difference between the NYSE Composite Index and the new high and new low of NYSE-traded stocks.
After the last departure, the stock market rebounded sharply
As for whether it will hit a new low after rebounding, I can't make a final conclusion at present, because there is also a possibility that with the completion of bond market pricing, it is not impossible for US stocks to go up like this.
Why do Japan and Britain dare to rescue the market at this time? Think about it, if the Federal Reserve still has a lot of room to raise interest rates and the US dollar still has a lot of room to rise, will Japan and Britain dare to take action at this time?
A high probability is that Japan and Britain have already greeted the Fed, and the Fed's harvest is basically completed.
However, how the long-short contest in the specific market will change depends on the short-term technical changes. Let's talk step by step.
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