S&P 500 Price Analysis September 2020 | More Record Highs for SP500?

by birtanpublished on October 3, 2020

Here we are the s p 500 has uh finally hit fresh all-time highs um clearly it's been quite the year for this market we saw those all-time highs originally back in february market sells off uh into into march and since then we've had this fantastic recovery i think that has defied expectation i think for many people i don't think um many of us would have expected the s p to be selling all-time highs when we saw it falling off a cliff in march so in this video we'll see is there more to come is it time to go short where's the

Trading opportunity um all the usual stuff it's difficult to argue with this sort of trend at the moment i mean the nasdaq has been setting all-time highs for a couple of months now the s p slightly lagging behind but you can see just looking at the candles here on this chart and particularly i think if we went back to um sort of the middle of july end of july we very rarely uh get any decent correction in the s p the market might sell off for a day a couple of days but then bang

Off we go and the market pushes higher so i think from a short-term trading point of view it's perhaps difficult because this has definitely been a buy and hold market on the way up we haven't had much in the way of volatility we've got to go back to uh well to june of this year to see any decent sort of sell-off in the s p and since then the market has pushed higher so as usual the question here is what do we just buy do we just pile in and buy set a sensible stop and try and

Ride this trend higher or are there signs that perhaps the market's running out of steam i'm going to talk about what's driving it uh in a second for a couple of minutes then we'll come back and look at things in more detail before we do that let's look at the trades we've got at the moment so we do have an s p trade running at the moment um it was uh triggered just a couple of days ago i think in the last video um i didn't think he was going to hit all-time highs any time soon but it has and uh so we

Set an order to buy if it broke through to all-time highs so we bought in at 34.20 uh the market's currently 34.48 at the time recording so that trade is slightly ahead we've got a few other stock related trades on there's a short netflix trade that is under underwater by a little bit at the moment um the apple trade from the 24th of june clearly apple is still motoring bought into that at 367 uh in the market apple currently around about 503 so the

Question is should we be adding more s p up here should we be going short i'll talk about what's driving it then we'll come and look at this in more detail hello i'm david jones from capital.com i thought we'd do an update on the s p 500 as it has finally followed the nasdaq higher and broken out to fresh all-time highs continuing to push higher so far this this week so in this video we'll do the usual i'll talk a bit about what's driving it what could

Stop this strength we'll look at the big levels to watch then we'll go back onto the charts back onto the platform and see about adding uh to some of those existing trades as usual if you're watching this and you haven't subscribed if you could click on subscribe it helps support the channel and it means we can continue to push out um hopefully lots of content that you find interesting uh in the weeks ahead but let's get into it let's talk about what's driving the s p then we'll get um back onto the

Platform so as of the the time of recording the s p is now positive for the year clearly it's been an incredible volatile year thanks to the coronavirus pandemic we saw uh fresh all-time highs hit in february then the market falls off a cliff we've seen an incredible bounce back since then and as we stand at the moment the s p 500 is up uh about six percent uh for the year today in 2020. so uh so far this week we've seen it continue to set fresh

All-time highs i'm suggesting there's a lot of momentum still out there in this market of course the nasdaq um had been hitting uh all-time highs uh since june so it has lagged behind the recovery we've seen there and tech really have has led the way uh in this recovery the tech stops in the likes of um apple facebook amazon netflix google the incredible performance of tesla all these different stocks have really boosted uh stock market performance and some

Sectors you know clearly have not benefited as much so i think plenty of people would say this isn't a particularly broad based recovery in stocks but the s p is still at all-time highs of course intervention uh by governments and central banks has helped invest the sentiment i think in the us the central reserve have made it at the federal reserve sorry they've made it very clear that they're going to stay pretty much near

Zero interest rates uh until 2022 so investors have access to uh cheap money they can borrow and hope to invest it somewhere else at a better rate which brings us back to something we've mentioned before uh i think there's an element of tina driving the market there is no alternative so i think all of this has helped push stocks higher and whilst you might argue with the sentiment and think it is somewhat ridiculous that the market is where it is it's an expensive game i think uh to go against it we'll have a

Look at the market sentiment tool when we go back on the platform when it comes to things that could trip up this market positive positivity recent u.s consumer confidence numbers were their lowest since the pandemic began so there may be there's a feeling out there that the us consumer as we come out of lockdowns and get back to normal or near normal for the economy uh u.s consumers are maybe being a little bit more cautious so perhaps we see more of that in the last few months of the year then

There's the the u.s election although at the moment now clearly um joe biden is ahead in the polls with a couple two or three months to go stock markets seem to be taking the various political ups and downs uh in the u.s pretty much uh in their favor so i don't see any shocks there perhaps the economy ends up being much worse than expected the recovery isn't as good as it could be um but either way at the moment investors still positive

Let's talk about the levels towards i think 34 55 the most recent out of hours high at the time of recording after that 3 500 seems an obvious target for the s p lots of support levels left on the way up i think the most immediate one for me on the daily charts middle of august uh down at 33 25 but let's put some color on these numbers let's jump back onto the platform and see if there's a trade to do before we get into this let's talk about market sentiment i did um

A video a few weeks ago on market center and the market sentiment tool in our platform and it's here on the right hand side you can see it here and it looks at what our clients are doing our clients buyers or sellers of this market their total positions um how does it how does it break down you can still see for clients with us we've got to trade on on the s p um just over 70 of them are long the s p um nearly 30 percent are trying to call the top here so maybe feeling a little bit of pain so

I don't think we have that extreme a reading uh for the moment from our clients you know if we were above 90 everyone thinks the mark market's just going to carry on going up then perhaps there's an opportunity for a a trade against sentiment there but at the moment perhaps it's not surprising to see this sort of 70 bullish considering what the market um has done but let's take a look at things in more detail and see what trade we should do now so there's the s b

Trains you don't need to be um a rocket scientist to see that the trend has been up since those march lows we get sell-offs they don't last very long and the market pushes um pushes higher again if we look at the rsi down here not surprising um the rsi is is that an extreme it looks to be the most extreme reading since june um so we've got to go back to june we did get a half decent sell-off uh in june but as i often say you know just because the rsi is at an

Extreme doesn't mean the trend uh is going to end but i think it is it is interesting up here i think if you did want to think about going short that's one thing you can add uh to your to your argument for going short but but for me i'd still want to be a buyer you know this trend is still strong let's try and break this down to the shorter term chart and see if we can look for an entry point i've already bought into strength having an order to buy when it broke to fresh all-time highs

What i'd like to do now is is buy a dip um assuming we are going to get a dip it's not going to be a market that's going to go up forever is it famous last words but let's let's have a look on the shorter term charts so here's august so far and you can see um i suppose the 3400 area was something of a problem from the sort of middle of august for maybe 10 days or so and then the market broke through and off we go selling fresh all-time highs so i think

What i'd like to do i'd like to be a buyer but i've already got a position on the s p i've already long apple as well so we do have some stock exposure uh in the in the trading account what i'd like to do is um is buy a dip so i think um you know we get breakouts breakouts will often come back and retest uh the breakout zone so maybe we get a move back to 3400 so i'm going to put an order in to buy um if we do see that happen let's say i

Go 3410 as an order to buy and in terms of stop losses i'm going to set it the other side of this um sort of wide relatively wide zone i support i suppose trading zone that we had in for the second half of august so i'm going to go 33.20 uh for a stop here so i'm going to buy at 3410 with a stop at 34.20 really hoping there's some volatility but still recognizing this market is still bullish i'm not expecting a massive sell-off but if we do have a move back to the low

3400s i think that's an opportunity let's set it up so the market's currently 34.48 i what i want to do is buy three if the market dips back to uh 3410 you can see that level highlighted on the chart if that order gets filled put a stop loss in at 33.20 and by trading three here i'm doing it for my normal risk of um just a couple of hundred pounds which is what we normally risk on these trades i think the account has has grown clearly over the last year i

Think we're up um almost 60 percent on the account including open profits at the moment so i need to think about increasing that risk maybe we'll do that from september but for now let's place the limit order that's it uh the limit orders in and for me i think it is only if we start to lose the mid august low around 33.25 does it start to look as if um we're getting near any sort of weakness any sort of decent sell-off for the s p so at the moment we can't argue with that trend

The trend you know is clearly up we've broken through the fair highs me as a trend follower i want to be going with the trend so for now i'm happy to buy into any dips uh until the market proves me wrong that's it for the update we will see if this strength continues but from me david jones and capital.com good luck with your trading for more trading videos just like this please subscribe to our channel

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