We had a week of volatility and it was exactly what we expected so I guess you lived with it in peace. But, beneath the surface there is a huge and fascinating battle of minds – money – words.
The volatility after the sharp increases we experienced is just a respite that also fits in terms of the calendar for the month of February which has a negative historical image.
The ongoing battle is between classic economists and investors who stick to their claim that the rise in interest rates will eventually lead to a crash in stock prices and the new generation of investors who ignore the warnings and buy the stocks that, relative to the peak levels, seem cheap to them. Apparently for this generation, the stock investment model weighs more parameters than interest and multiplier. It is multi-dimensional and connects to the great change in the perception of life accelerated by the corona epidemic.
In order to know who wins the battle, we will continue to follow the graphs. In order to assess who will win the battle we will have to research and study.
for example, Larry Summers, The former US Treasury Secretary writes that so far the Fed’s efforts to raise interest rates are not helpful, the economy is not slowing down, and there is a risk of continuing to press hard on the brakes (interest rate hikes) which will eventually be too strong.
These are not “equal” forces. The institutional forces of the old economy: the investment banks, economics professors, government, traditional financial press and the financial “education” that most investment managers received and receive are much stronger than the new private investors and the investment managers who represent them like Cathy Wood. Unless you assume that global trends are behind the young people. The young people simply reflect them faster than the establishment forces can and especially want to. Look, for example, at how Goldman Sachs straightens a line and says that there is a probability of a soft landing of the economy. Look what happened to the recommendation on YEAR As I will tell later. It’s not just young people who lack a sense of risk, these are young people who want and promote a new world order backed by platforms that help them bypass the establishment system.
And how will you know that I’m not just talking about the young? Because I rely on an article that said that the amount of net purchases that came from online accounts (which represent retail investors, many of whom are young – this can be learned from the stock selection) in January reached an all-time high. This is about a billion and a half dollars in stock purchases per day. Here is the graph with credit to its sources. The popular stocks are TSLA and – NVDA. also AAPL,AMZN, SPY, ARKK. the figure relative to SPY (The basket fund that follows the S&P500) is particularly interesting because another article I read also talks about record numbers in options trading on leading basket funds. ARKK Suitable for renewing our monitoring of the fund and shares ARK Shares are synchronized with the new investors.
So this is one story for today: institutional and institutional versus retailers and young people. Will the latter complete a revolution and defeat the former? From the height of my years I wouldn’t bet on them at a 1:1 ratio but as long as the graph shows it’s better than 1:1, I’m with the revolution.
Second story: YEAR
stock YEAR She is one of Cathy Wood’s biggest holdings (if not the biggest). After the reports were published, a Bank of America analyst also changed his mind and changed his recommendation from underperform to buy. do you understand That’s part of what’s going on here. The analyst bumped the recommendation two notches from underperform, through strong, to buy while Kathy Wood picked shares into the decline.
In terms of the graph, Roku is still interesting for Kenya even though it has already doubled from the lows. We just need to check whether it is supported above the 200-day average or whether it will fall below it for a while, close the rising price gap and then return to above the average. Since this is a breakout gap there is a chance it won’t close.
Speaking of Kathy Wood let’s look at The Bitcoin. There is a struggle between those who see it as a currency without currency and therefore worthless and those who see it as worth a million dollars. As I wrote about a month ago in relation to the market, increases attract buyers as decreases attract sellers. This is a behavioral effect that has been proven in studies and is also the basis of the philosophy of technical analysis. Therefore, as Bitcoin rises, to some future equilibrium point, more people will choose to listen to their side of the story. like the market
In terms of the graph, the 26000 area is a significant resistance area (future balance point?). Its breakout above will mark a potential for a continuation of it. Support in the 24000 area.
Third story: the bond decision
We started following the graph of the US 10-year bond yield. Look and you will see that he is at a decision point that is important for the continuation of the perception of reality, at least for the people of the traditional economy. On the one hand – a breakout of the descending trend line and a sign of an increase. On the other hand, a super significant level of resistance. If it breaks above, we will understand that there is a renewed increase in expectations for an interest rate increase and it can overwhelm the market and bend it downward. If the resistance works and the graph drops back below the descending trend line that broke above we will get a positive sign. Follow what is happening around the blue line.
Fourth story: Shuffle the market
God – S&P500 Dropped a bit above the steeper trend line I added last week and supported above the purple horizontal trend line. If you connect this to the resistance line of the bond yield we seem to have the test of the market’s determination. Objection to the bond and return of the S&P500 Above the rising trend line – the market’s uptrend is in effect. A breakout of the bond’s resistance and a drop in the S&P500 Below Friday’s close, they will learn that the index is on its way to 3950. This is probably the level that separates the upward trend we are following from a downward reversal. As far as the Nasdaq 100 is concerned, the critical support is the area of 12000. There is a chance that we will see a drop while volatility to these levels (3950 / 12000).
These are the stories for today. We are just storytellers and the graphs will teach which ones develop into bestsellers and which ones have no literary value :-). Do you have the latest versions? Share!
The author of the article is Ziv Segal ([email protected]) who deals in the field of financial markets, technical analysis, behavioral finance and mental training, who has diverse occupations in the field in academia and practice.
*The above should not be seen as a recommendation to carry out operations and/or investment advice and/or investment marketing and/or advice of any kind. The information presented is for information only and is not a substitute for advice that takes into account the data and the special needs of each person. Anyone who makes any use of the above information – does so at his own discretion and sole responsibility. The company and/or the authors own and/or may own some of the papers mentioned above.