While we have heard and read about the fear of economic down turn due to impending trade war initiated by US President, Donald Trump. Most of us tend to have a bearish outlook for the market future. But one of the speakers in a market talk seminar I attended last week spoke positively about the near future of the US markets. He proposed that Dow Jones Industrial Average Index is going to hit 30,000 sooner or later. He used various technical and fundamental analysis to prove his proposal.
For one, Trump just implemented corporate tax cut starting early this year. A similar move in US history was with the time with President Ronald Reagan. Market by then was pushed to the highest level after more than a year before it dropped to a great recession.
Secondly, he proposed from the Elliot Wave theory that the current market drop is just a temporary draw back. We are in the midst of the forth wave. This will be a wonderful buying opportunity. Because there will be a final leg up, the 5th wave, before recession comes. Before the fall for next recession, Dow would have hit 30,000 mark or more.
Recession by 2019
He used other theories, calculations and analysis and predicted that the next recession won’t not happen until the second half of 2019. He believes that the current trade war is not going to be full blown out. Both countries between the US and China somehow are going to find a middle ground to resolve their trade disputes.
His proposal was so persuasive that I went home and immediately queued up a bull position for S&P 500 ETF stock. After a night of rest, my mind became sober. When I saw my position did not get filled overnight, I went in to cancel it.
Now, the same question remains, is Dow going to hit 30,000 historical height sooner or later. In fact, it is currently shy of merely 4,500 points, or only an upswing of 15% away from its historical mileage. What has been keeping it from reaching that target point?
Strong US Fundamental
Fundamentally, US corporate earnings report on first quarter of 2018 was impressive. The second quarter reporting currently was also very positive. Even Trump praised the GDP growth of second quarter was remarkable. The only thing that hinders stock going bullishly strong is the trade war initiated by Donald Trump himself.
Regarding this trade war, there was a slight twist and turn last week between US and European Union. They have both declared “cease war.” Now the turn of attention is between China and US. The impending tariff of 200 billion China goods Trump is planning to implement is more deadly than ever be. Will Trump press his button to shot at China and ultimately to himself or to the whole world economy?
Looking at current development, cease fire between US and EU, strong US economic data, will these boost up Trump’s ego that he is winning the trade war?
It seems like the message is clear. It looks like China is now being isolated. To Trump, since China is more “stubborn”, and its stock market is bearishly weak now, it is the best opportunity to teach China a “good lesson,” Trump can’t wait to see his victory in declaring the tariff implementation against China. It looks likely there is no turning back for the final trade war declaration, hitting the global economic supply chain and its effect.
Will you dear to bet Dow hitting 30,000 points and open a bull position now? If you do, Monday market would possibly be a good opportunity since Market was down on last Friday market close. If not, this would just be a good reference for the future if things develop differently.
Thank you for reading and happy investing but invest safely!
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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions. This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to make up individual investment decision.