CNBC reported a significant downturn in the S&P 500, marking its most substantial decline since January. What were the underlying factors?
In my analysis, two key reasons stand out:
1. A surge in market panic selling occurred on Friday (12th April 2024) amidst escalating tensions between Iran and Israel. This heightened geopolitical uncertainty prompted investors to adopt a risk-averse stance, refraining from holding stocks over the weekend in anticipation of potential further escalation.
2. Notably, the projected timing of the first rate cut, initially anticipated for June 2024, has been deferred to September 2024, according to insights from FedWatch. This adjustment has led to a notable decline in the probability of a rate cut in June, dropping from 54.6% to 26.9% within just over a month.
Preparation for such market conditions commenced as early as January, amidst the market's ascent from 4111 in October 2023 to 4782 by December 2023. Based on technical indicators, concerning trends have emerged, with the MACD signaling a downward trajectory on weekly charts and the RSI indicating overbought conditions.
The pivotal question remains: What is the anticipated extent of the
SPX
decline? Predictions remain uncertain. Nevertheless, I've outlined potential buying entry points:
1. 4952 - 20SMA - 10% entry
2. 4600 - 50SMA - 30% entry
3. 4344 - 150SMA - 40% entry (though this appears improbable)
4. 4168 - 200SMA - 20% entry (a scenario akin to the third bear market in just two years)
While I sincerely hope to avoid the specter of WW3, with its inherent human and economic costs, I remain poised to seize investment opportunities within the coming 1-2 years. As always, these insights do not constitute financial advice.
In my analysis, two key reasons stand out:
1. A surge in market panic selling occurred on Friday (12th April 2024) amidst escalating tensions between Iran and Israel. This heightened geopolitical uncertainty prompted investors to adopt a risk-averse stance, refraining from holding stocks over the weekend in anticipation of potential further escalation.
2. Notably, the projected timing of the first rate cut, initially anticipated for June 2024, has been deferred to September 2024, according to insights from FedWatch. This adjustment has led to a notable decline in the probability of a rate cut in June, dropping from 54.6% to 26.9% within just over a month.
Preparation for such market conditions commenced as early as January, amidst the market's ascent from 4111 in October 2023 to 4782 by December 2023. Based on technical indicators, concerning trends have emerged, with the MACD signaling a downward trajectory on weekly charts and the RSI indicating overbought conditions.
The pivotal question remains: What is the anticipated extent of the
SPX
decline? Predictions remain uncertain. Nevertheless, I've outlined potential buying entry points: 1. 4952 - 20SMA - 10% entry
2. 4600 - 50SMA - 30% entry
3. 4344 - 150SMA - 40% entry (though this appears improbable)
4. 4168 - 200SMA - 20% entry (a scenario akin to the third bear market in just two years)
While I sincerely hope to avoid the specter of WW3, with its inherent human and economic costs, I remain poised to seize investment opportunities within the coming 1-2 years. As always, these insights do not constitute financial advice.