- Forecasting the US stock markets at the moment is a very difficult thing to do, because unfortunately we are moving on the latest drama.
- Drama is something that we are getting in heaps at the moment, via headlines about tariffs.
- Because of this, I do anticipate that the month of April will be every bit as volatile as the month of March, but I don’t necessarily like shorting this market for a wealth of reasons.
The first thing is that the market has sold off quite drastically to begin with. That doesn’t mean we can’t drop another 10%, it just means that if you were going to short the market, you should have already done it. Remember, another major reason to not short the S&P 500 is that it’s not designed to fall for very long. It is not equally weighted index, so it only takes a handful of stocks to get this thing going to the upside again. It is through that prism that I tend to look at indices overall, as they essentially only have 2 speeds: time to buy, or time to sit on the sidelines. Shorting an index is a great way to lose money, although I do know a handful of people that can do it, all one has to do is look at a historical chart to see how generally speaking, it doesn’t work out in your favor. Furthermore, many of you are trading CFD markets, which means you’ll be paying for the privilege at times.
The 5800 level I think is going to be key here, and if we can break back above that level, then we could very well see the market run higher. However, it will only take one tweet from Donald Trump to knock a percent off of the market. This is the world we live in right now, and although I wish I could tell you something completely different, the reality is that until the market learns to ignore the president, it will be at the whim of his latest statement. As far as the economy is concerned, the US could be slowing down shortly, but quite frankly this is considered to be at best a short-term recession, assuming that it even becomes a recession.
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