Looking ahead, beyond the Correction
On Monday 5 Oct 2020 2.12pm, I emailed Clients my latest post titled 'Looking ahead, beyond the Correction'.
How time flies this year - we are now in the final quarter of 2020! Hope you and your family are safe & well!
Apologies for the lack of write-ups (again!) as the business continues to notch into a high gear.
Main reason is because of the continual engagement of UHNW (ultra high networth) & corporate business whose trading/investments needs and account administration are indeed more complex.
Yes, I did consider engaging an assistant but as any pragmatic businessman will know, cost structure is real but future revenues are not! It is likely I will also be selective in taking in new clients going forward so as to maintain a high level of service standards for my current clientele.
Now back to our dear Mr Market:
Since my last writeup on 6 Sep 2020* warning of a potential correction in the S&P500 Index (SPX), the SPX has corrected 10.5% from its all time high on 2 Sep to the recent low on 24 Sep.
Reference to my whatsapp replies to various Clients respectively on 18, 22 & 29 Sep (pls see attached whatsapp images below), the key takeaways are:
1. It is unlikely a 6-mth rally’s correction to be completed within 3 weeks.
2. A possible medium term correction framework (blue dotted lines) may be as per SPX Chart image attached.
3. SPX appears to be doing its bounce now and may stretch towards the SPX 3440 - 3500 region (being 61.8 - 78.6% retracement levels). 4. Oct month leading into 2 Nov elections may be volatile and likely to see whipsaws. 5. A 20% 'correction' from all time highs (ATHs) will take SPX down to about 2870+/- (see orange box as per my 6 Sep SPX Chart) 6. Beyond this correction, it is likely this 11-year old US bull market will continue due to liquidity driven reasons. In a nutshell, the COVID pandemic gives the FED full legitimacy to issue their 'blank cheque' to support whatever asset class they deemed important enough to support. This is, of course a moral hazard and will come back to haunt them as a nation eventually. BUT well, that is a story for another day.. . In the meantime, Live Long & Trade Well! . Thank you & regards . Thomas Ng, CMT Principal Trading Representative 首席股票经纪 www.thom-ng.com . #plsreaddisclaimer #chartforillustrationonly #spx4oct20 #beyondthecorrection #fedblankcheque #moralhazard #bullmarket #befluid #wytant #livelongandtradewell Chart: tradingview.com'