Will the US Stock Market Keep Rising?

5 min read

Dear traders,

The US market is continuing its rally despite the harsh economic situation on the ground. Will this disconnect remain throughout June and summer?

This article reviews economic and political trends. But above all, we analyse which companies are fueling the stock price growth the most.

Tough Political Spot for the Financial Markets

When analysing the financial markets with fundamental analysis, it would seem to suggest a different story. In particular, we heard about a new chapter in the US-China trade war. 

We also saw about 40 million people that lost their jobs due to Covid-19. And lastly, there is a general eroding of confidence in central bank-generated money (as demonstrated by the remarkable increase in the physical gold demand). 

Technicals Remains Strong As Ever

Nevertheless, if we look at the S&P 500 chart reported below, it is evident that the market is basically insensitive to this situation. It is surely affected by the enormous amount of money injected into it. 

The S&P 500 index is said to indicate the market status. However, if we closely analyze the 500 companies considered we can observe that, year to date, the 5 biggest companies are up 15%. While the remaining 495 are lower by a collective 8%. 

Therefore, the whole US market is represented by 5 biggest companies only that are the so-called FAAMG: 

  • Facebook
  • Apple
  • Amazon
  • Microsoft
  • Google

The next earnings period will be interesting. If the amazing increase of these FAAMG stocks will not be accordingly supported by similar earnings, we may see a rapid market decline.

Options Trading Approach

From a technical standpoint the SPX setup is bullish. After a small congestion, the price recently crossed upwards the 200 moving average (blue line). 

In the short term, we could expect a continuation of this trend with a first resistance at about 3100. A more important resistance level is located in the 3240-3250 area (pink rectangle in the chart) that could be reached by the end of the month. We could then see a retracement before achieving new all time highs.

In summary, we could maintain a long bias but with some downside protection through PUT or PUT spread options. 

How to Start with Options!

Thinking about options but not sure yet? There are a couple of ways to move forward before committing to the course or educational signal service. Here is how you can stay in touch:

  1. Join the free ecs.OPTIONS telegram channel
  2. Sign-up to the ECS newsletter with trading ideas in your email inbox
  3. Join the free live webinar options webinar with Marco & Chris

If you are ready to move forward, then you can choose from:

  1. €899 one time fee for Options course in English – this includes 1 month of option trading ideas (option.SWINGS).
    Option trading ideas (option.SWINGS) – experience is required:
  2. €97 per month (including VAT)
  3. €289 per quarter (including VAT) – receive 1 month for free for a total of 4 months
  4. €899 per year (including VAT) – receive 2 months for free for a total of 14 months

Good trading,
Marco Doni – ecs.OPTIONS expert and CNBC contributor

The articles are not intended to give any advice on how to invest money, they are just for educational purposes.

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