It's a bird! It's a plane! Oh wait, it's the stock market!
Source: www.raytheonmissilesanddefense.com/what-we-do/missile-defense/interceptors/guidance-enhanced-missile
On Monday 22 Mar 2022 1.33pm, I emailed Clients my latest post titled 'WW3 they say.. but S&P500 Index is up 300+ points since the day Russia invaded Ukraine!'.
Below is the full transcript for your perusal:
'Dear Clients
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We are closing in on Q1 2022, and boy has it been wild! Today i will center on the usual S&P500 Index (SPX), HK Tech stocks & good ol' Gold!
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1) S&P500 Index (SPX):
Chart 1 - S&P500 Index Daily, 10-mth
3 days before Russia invaded Ukraine on 24 Feb, I mentioned in my 21 Feb writeup that:
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'It appears that a lower low (on SPX) is looking inevitable as price action exhibited textbook weakness in the past 3 weeks. In this lower low scenario, the likely downside target zone is possibly near the SPX 4000 region. However, the most extreme & fearful downside target will be at 3700 if a potential bearish Head & Shoulder Formation executes authoritatively.'
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I am absolutely thrilled to see Mr Market obliging my view and that SPX touched a low of 4115 on 24 Feb 2022 (the day of the invasion by the way) before crawling up 350 points (admittedly with much volatility) over the next one month to close at 4463 last Friday night (18 Mar 2022). See Chart 1.
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Thus both of my high probability assessments were pretty much right on the dot - a lower low has been seen and that low was close to SPX 4000.
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Of course, the future is simply a mesh of possibilities, and my role as a Technical Analyst is to decipher which are the highest probability ones.
Should SPX break 4000 authoritatively, we are likely going to have a date with SPX 3700 for reasons stated above. But this is NOT my base case at the moment. Nevertheless, in either scenarios, I would be happy to continue to add my SPY ETF (S&P500 Index ETF) positions. My bullish long term (1-2 years) outlook for SPX did not change.
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So what's next for the short term?
Using my Thom's Bollinger Bands (BB) strategy, the current set up in SPX price action has bullish connotations. The upcoming test that you should really look out for is how price action will behave when it eases off from the current rally to test the Bollinger Bands (BB) midpoint line.
If the BB midpoint line (now at 4300 but it is a moving line) can defend (support) the resuming downward price action and then subsequently sees price action turning back up to a new local high, we might just have a bottom in place! Next few weeks will be important but let's watch it step by step. Feel free to drop me a line to seek an update!
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2) HK Tech stocks:
'Price is what you pay, Value is what you get'
~ Warren Buffet
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Pls see now the screenshots of my whatsapp reply to a client last Thursday (dated 17 Mar 2022) when he asked me what is my view then of HK mega-cap Tech stocks such as Tencent & Alibaba, after seeing the disastrous drop in the same week.
In a nutshell, I repeat what i had mentioned back in my 30 Aug 2021 post 'An Incredible Tale of two Greats!':
'Since this is an exogenous event and no ones knows when the regulatory actions (on the Tech companies) may ease or end, I recommend two possible actions:
1) Avoid taking direct positions on the Chinese Tech stocks 1st since most of the said stocks are still on downtrends & no one knows who else may be in the crosshair of the Regulator.
2) If you remain bullish in Chinese tech stocks, then taking a position in the Hang Seng Tech ETF or Hang Seng Index ETF will offer you diversification with no single stock exposure, thus lowering your overall risks. When regulatory action eases off and the trend reverses (up), then taking a direct position may make more sense..'
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(Reference: https://www.thom-ng.com/post/full-post-of-30-aug-2021-writeup-an-incredible-tale-of-two-greats)
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The Lion-OCBC Sec HSTECH ETF listed in SGX is a possible consideration.
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3) Gold:
'..What’s in a name? That which we call a rose
By any other name would smell as sweet..'
~ Shakespeare's Romeo & Juliet
Chart 2 - Gold Monthly, 22-year
Pls check out attached Chart 2 above which is the 22-year monthly chart of Gold.
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As Juliet would agree - it doesn't matter if you call Gold's Chart a multi-month inverse Head & Shoulder Pattern or a Cup and Handle Pattern, both patterns are likely to resolve bullishly and 'smell as sweet'!
A sustained break above previous all time high price followed by a successful backtest would likely see a bullish long term target at USD 2940, and possibly beyond.
Chart 3 - Bitcoin Daily, 2014 to 2017
To further make my case, pls now see Chart 3 or click this link (https://www.instagram.com/p/BOcaJcVjA5D/) which is a bullish write-up by me on Bitcoin, back in 25 Dec 2016 (when I was only on IG platform). Bitcoin was trading around USD 900 at that time and my target was a humble USD 1200.
The bullish chart pattern Bitcoin had then was also an inverse Head & Shoulder Formation. In case you are still living under a rock, Bitcoin trades at USD 43,000 today. Wait, what...?
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For some interesting gold names & ETFs, pls drop me a line to pick my thoughts.
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I've covered the 3 main topics that I promised back in Jan 2022 to discuss. The only market left is our favorite Straits Times Index (STI) which I will be writing up something soon.
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As usual, for macro narrative & investment ideas, pls feel free to call me. For admin matters, kindly drop a line to my PA, Ms Tan.
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Live Long & Trade Well!
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Thank you & regards
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Thomas Ng, CMT
Principal Trading Representative 首席股票经纪
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#plsreaddisclaimer #chartforillustrationonly #spx18mar22 #hktech18mar22 #gold18mar22 #befluid #wytant #livelongandtradewell
Chart source: tradingview'