This week vas very volatile with Thursday an Friday having big moves, we closed the week with heavy sell side pressure, showing an inverted hammer on the weekly candles. This 2800 level has been a key level for the past year and a half. Based on what I see in the charts and some fundamental information I believe that if we close below the 2800 level and break the support (blue trendline) we can go all the way down to the 2600 - 2650 levels of last year.
On a fundamental standpoint, the Fed decided to hold the rates and went on full dovish to the point where they don't expect to raise the interest rates this year. With the global picture painting a global slowdown, this decision they made to basically decide 0 rate hikes this year indicates that the US economy might not be as strong as we think. Investors have already started to run for the hills and rotating capital into bonds (TLT, etc) which rallied hard on Friday causing the 10 year yield to effectively go below the 3 month yield generating an inversion in the yield curve (which up to this point in history has been very accurate in indicating a recession might be coming), and defensive sectors such as utilities XLU (which basically just reached an all-time high).
I am not saying the market will crash since I don't have a crystal ball to know the future but one thing for sure is that probabilities are pointing that a bigger down move might come soon and there is way more reward playing short at this point than trying to be long.
On a fundamental standpoint, the Fed decided to hold the rates and went on full dovish to the point where they don't expect to raise the interest rates this year. With the global picture painting a global slowdown, this decision they made to basically decide 0 rate hikes this year indicates that the US economy might not be as strong as we think. Investors have already started to run for the hills and rotating capital into bonds (TLT, etc) which rallied hard on Friday causing the 10 year yield to effectively go below the 3 month yield generating an inversion in the yield curve (which up to this point in history has been very accurate in indicating a recession might be coming), and defensive sectors such as utilities XLU (which basically just reached an all-time high).
I am not saying the market will crash since I don't have a crystal ball to know the future but one thing for sure is that probabilities are pointing that a bigger down move might come soon and there is way more reward playing short at this point than trying to be long.
Comment:
Correction: The correct name for the pattern is a shooting star (messed up)