A Day of Decision

Decision

This week has been another tough week. Investors have been rattled with intense feeling of the imminent coming of the big bear. The resignation of Gary Cohn, the top Financial Adviser for the Trump Administration has added bearish view to the global financially view. With Trump’s stunt attitude towards his resignation saying there are more on the waiting list to fill the post, expectation for the global trade war is seemingly confirmed to pursue on from now.

Therefore, in a long run, the fear of global recession is becoming real as other countries like European countries has already planned to response accordingly. Though this first round is specifically targeting Canada and Mexico for the TAFSA renegotiation plead, but China would be the next target, as Trump mentioned about the copy right issues in China. And of course China would have their gun loaded with full powder already. China could easily retaliate back with soy bean imported from the US, not to mention China is the largest US Bond holder. When this game rolls on, it would be endless and definitely ugly.

Technical Analysis of Market Index Chart

Looking at the technical side of the S&P 500 Futures Index Charting, it seems to find its course of direction this week.

ES break up
Decision making day is on the weekend

It has formed a symmetrical triangle with the lower trend line support from the previous low’s and the down trend line resistance from the previous top’s. With this symmetrical triangle, price direction has been moving to a corner within this week end where it must make a decision to break up or break down.

While with the top resistance line, the index price can be seen as moving along a temporary down trend channel lower line formed with the short term low points. This short term down trend channel poised a real challenge for the index immediate direction. Any break down from uptrend support will have to respect this down trend channel and slowly move down to follow this bearish channel.  We would have to wait whether there are any more sensitive issue for the market on this Friday, the last trading day for decision making.

Portfolio Adjustment Opportunity

With a good run up US market last night, I would expect Asian markets would echo with a good surge today. If you are fully invested, I would suggest today would be a good small window of opportunity for you to lower down your equity exposure. If you have freaked out last week, nothing much you can do now. But for those who are still invested but have a bearish view for the market’s future, today would be a good opportunity to do portfolio adjustment.

However, market trend, analysis and news can be deceiving at times, I would not recommend investors to fully retrieve to hold cash. I would still recommend partially invested with the ratio you feel comfortable. Because if market break up today and for the next following weeks, you will not feel regret because you are still there invested, instead of total hold back and later return with wrong timing~ when market spike high.

It is also good to take profit partially because we would never know what would happen next week even if there is a break up today. There are so called false break ups’ according to technician analyst. It can fall back into the bearish channel any time if market wants to. Market can do anything it wants.   As a reason, it is better to play friendly with Mr Market than fight against it or command it to go for your favor.

Happy learning!

 

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