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Is the speculation of us selling off from here overrated?


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There is nothing new about the tariffs or the Feds arms being twisted for a rate drop. The POTUS has been pushing the otherwise independent FOMC to go on an aggressive path of rate reduction for a while now. He has also been threatening additional tariffs for a while now. So the pullback that we had initially off the pressured Fed rate decision and move higher followed by a threat of additional tariffs on China were largely reactionary trades.

Yes there is fear of global growth stalling and economies around the world slowing down in their growth but has the US reached the peak of the growth curve? Despite the yield curve inversion or unfazed forward guidance by our corporations, and improving consumer price index and Manufacturing PMI's and employment situation all supporting continued growth are we ready to throw in the towel because we cannot improve inflation numbers?

The other day, all that CNBC was talking about was CapEx. What about it we ask? If capital expenditures are warranted, corporations are not being shy in spending. Yes, there needs to be a reason to keep spending monies on capital goods when we are satisfied with growth and looking to improve ever so gradually and consistently.

And then there is technical analysis which says we are not oversold. I mean what on earth is oversold or overbought any way. What are we over buying or selling to make a judgment on oversold or overbought. Market participation is dictated by value. If there is active participation the valuation of an asset will appreciate over time and there is a ton of buying. If there are traders who are short they will be forced out of their positions and prompted to liquidate which generates more momentum for the upsde. If there is no interest, the market goes sideways and when it is over valued, there is profit taking and where there is unexpected news or tweets, there are reactionary trades. We just went through a phase of those reactionary trades and there are analysts already predicting 2770 for the S&P. What is the basis, we ask? Here is a technical chart. It shows that we are bouncing off the .382 level retracement for the S&P and the chart suggests we will remain bullish above 2843.50 area.

Chart

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Murali Sarma, Vice President of Business Integrations Inc., is an internationally known commodities analyst, author, trader and business consultant who has demystified commodity trading and introduced numerous futures trading strategies and indicators to traders - professional, non-professional and the novice trader - throughout the world. Murali began his trading career in the pre-dot-com bubble in 1998, electing to seek instruments to trade which had lesser volatility and offered more predictable analysis. From about 1999 to 2002, Murali traded out of the UK and moving to the US after that and working mostly independently with individual traders while learning from some of the best analysts and traders. While not being formally certified as a commodities trader, Murali preferred to hone in on his analysis and trading skills versus adding academically to his credentials. Murali believes that is isn’t about being right or wrong on your calls, it is about making money!

Murali has helped several traders become successful over the last 10+ years of active futures trading and has a strong following of traders who like to seek out opportunities in the futures markets on a daily basis versus following the old “buy & hold” investing adage. While not being opposed to switching hats and becoming an “investor” every so often with swing trades in the equities markets, Murali prefers to trade what he can see on charts using multiple timeframes and handcrafted indicators suited for all types of markets. Murali excels in trading sideways and choppy markets with a scalping style of being in-out of intraday markets when there is no defined trend, and on most other days prefers trading to his own computed target levels during the intraday timeframe, while following the trend.

In recent months, Murali has started a Twitter based alert service for intraday futures traders who like to trade commodities and index futures, and elected to blog post his daily analysis in commodities like WTI Crude & Gold and index future instruments like YM, NQ, ES & RTY. You may contact him via his email at info@tradeguidance.com

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