Unprecedented times! Some quick takeaways..
Updated: May 5
On Monday 13 April 2020 10.07am, I emailed my Clients my latest post titled 'Unprecedented times! Some quick takeaways..'
Below is the full transcript of my write up:
Hope all is well with you at the home front!
Apologies, finished a writeup too late on Sunday night to post, so here goes:
A few quick notes on the S&P500 Index (SPX) & Straits Times Index (STI):
1. My intermediate term bias is to see one more lower low on SPX with a potential bottoming zone of 2000-2200.
2. Current SPX relief rally is entering my 'stretched' pink zone (as per 29 Mar post) which is the 0.5 - 0.618% fibonacci retracement zone (2791-2934) from the recent March low to all time highs.
Do note last Thursday closing was 2790, right smack at the 0.5% retracement level.
Do also note historically relief rallies can be very strong affairs.
3. At this current point in time, two potential scenarios may play out for the next few weeks:
- One, price action swing down to touch the lower segment of the Bollinger Bands (BB). This is the NEUTRAL to BEARISH interpretation, as price may start start to get stuck in a big 600 point trading range between 2200 - 2800.
- Two, price action pulls back but remain within the upper segment of the Bollinger Bands (BB). This is the more BULLISH interpretation.
I reckon let's not run ahead of ourselves & take one step at a time as relief rally can continue to remained stretched within my said (pink) resistance zone.
4. As mentioned countless times, our local market STI is a price taker and is currently following thru with its US big brother quite nicely. As per my 29 March post, STI likely resistance zone for this bounce is at 2621 - 2748. Thus when US does pull back in the next few weeks, STI support is likely around the 2400+/- level. Below that, bearish connotations prevails.
Conclusion in Layman's Terms:
1. My medium term bias is still a lower low for SPX with a potential bottoming zone of 2000-2200.
2. Historically relief rallies can be very strong affairs.
3. Some form of pullback is likely coming in the next 1-2 weeks. Since price is now in the upper segment of the Bollinger Bands, the depth of that pullback will tell us the state of Mr Market's near term condition.
3. I'm always open to more bullish interpretations should price action & patterns change. The worst thing an investor/trader can do is to keep harping his/her bias with no regards to price action development.
4. Lastly, as all brokers and backroom staff are required to work from home (leaving skeleton structure in office), pls bear with us as all account opening matters and other offline administrative issues will likely get delayed too. Kindly do not mail out cheques (if possible) & consider various online payment options as it appears Singpost is facing delays as well. Thank you for your understanding & patience in this unprecedented times.
Live Long & Trade Well!
Thank you & rdgs
Thomas Ng, CMT
Principal Trading Representative