To the tune of the news of new monetary stimulus ( Quantitative Easing ) in the American economy and accompanied by acceptable business results in the 3rd quarter, the SP500 index has experienced a significant bullish rally from late August to the peak reached last November 5 , which has meant a revaluation of 18%.
With macroeconomic data: unemployment rate, consumption, GDP … not experience improvement and uncertainty of a new outbreak of the fiscal crisis in the eurozone, begin to raise doubts (more than reasonable) if the positive developments in markets equity is a mirage or can be a reality.
By now anyone who is minimally aware of what happens around them, escapes the divergence between the real and the financial economy . However, this situation is only a temporary phenomenon, because in the medium – long term tend to converge.
The question this time is: where?
Strictly applying the theory of technical analysiswe find that overcoming, on 5 November at the SP500 index level of 1220 points, set in late April, marks the entry into a long – term uptrend.
Although at first glance the chart above shows us such a situation, it should be noted that American economic policy has weakened the dollar and established types of virtually zero interest rates , has led to the search for higher returns in stocks and a rise artificial financial assets denominated in dollars .
One way to assess how may have influenced the depreciation of the dollar on the rise in equities, can be seen in the chart below article “Clarifications to the bearish primary trend: red” where the SP500 appear valued at € and in which it would not have exceeded the levels of last April.
Although it is clear that this represents a warning sign for investors or speculators in equities and should not even rely on a possible rise in long – term, it does not mean they can not take advantage of the situation.
This usually useful to look at support levels (blue lines) on the SP500 which gives us the graph below, where a correction may stop rising and bounce upward.
In general, support levels serve the trader as a tool that will combine their expertise and bring together a good strategy to try to capitalize on any operation in the markets.
Anyway we should not forget that the overall situation is confusing and complicated, and some predict a crash medium severe – long – term , prompted by an artificial rise in equities and a decline in organic demand for shares is already notorious as the graph above.
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