US Markets

US Markets have bounced back 100% from the bottom formed in mid-march 2020. The rally was unleashed by massive QE done by FED and ECB and other central banks across the globe. 

Ironically, I wrote an article on 16^th march 2020  contemplating that if COVID in the US continues to be on the same path as Italy, the disease will spread in USA and markets will plunge along with it and S&P may fall to 1600 levels. 

COVID did spread in US and the situation there is much worse than Italy but S&P bottomed out at 2200 levels on 22nd March 2020.

I also mentioned in that post that generally I don’t rationalize the price movement and once again I learned why it’s a good idea. Lessons learned well.

One of the crucial learning I had from the GFC was that liquidity drives the asset prices. If the central banks binge on massive QE then asset prices are more than likely to recover. On 31^st October 2010, I wrote, “Never fight the mother FED” Another lesson worth remembering.

If we look at the given chart of Nasdaq 100, we can see that the index is moving within the channel and now it has reached the upper end of the channel. The resistance for Nasdaq lies at 11000 levels.  

Similarly, S&P500 is having resistance at 3250 levels. What I infer form charts is that markets have reached to significant resistance level and the likely movement from here is downwards. 

Summary

1.       US index has reached long term resistance.

2.       S&P500 faces resistance at 500 at 3250 level

3.       Nasdaq 100 faces resistance at 11000 levels

4.       The most likely move from here is down.