Stocks-Where is the SUPPORT & Where Is The RESISTANCE-Who WINS? Read More!
March 15 2022 Option Professor Opinions & Observations
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There is a huge Tug of War going on between the Bulls & the Bears in the stock market as conflicting signs are all over the place plus the number of unknowns are about a many as you can get. One way or seeing which side will prevail short term and longer term is to consider moving averages and relative strength as a guideline on trend and power.
The BULLS look toward household spending balance sheets and corporate balance sheets suggesting a liquidity level that does not jibe with recession nor defaults. Operating leverage (which we told readers would send stock soaring after the crash of 2020) is still strong and some say the Fed will move so slow on rates that the tightening of valuations will actually see expansion in the 2nd half of 2022. Oil and bottlenecks will ease and inflation will crack (PPI had things in the report UNDER estimates). Headwinds could turn to tailwinds as spring turns to summer…Great! Any Price Proof??
Here’s the SUSTAINED PRICE PROOF we’d be looking for basis SPX…Closes ABOVE 4275 then 4400 then 4527 and 4600 PLUS get the RSI ABOVE 50! The QQQ needs to sustain ABOVE 333 then 353 then 360+ and get RSI’s ABOVE 50??
The BEARS look toward most short term and intermediate moving averages having crossed downward ( although some say when the “death cross” occurs and consumer sentiment is this low-double digit upside follows?). The inflation will sap consumers excess reserves and no more free stimulus to fall back on. In a slower growth slower earnings/tight margins environment you could see 16 or 15 PE ratios on $2.40 earnings could spell SPX at 3600 with a PE of 15! The SPX has support at 4100-3900 and then 3600 with QQQ support around 320 and 280 or reversion to 36 SMA 20 year.
The wild card on this in our mind is Russia & China in that both these countries have economies that are in trouble and both could cause further geo-political problems. Russia looks to be in a depression and China is shutting down cities that have supply chains and they also are working thru a real estate debacle while crushing their tech sector. With China; you could throw in sanctions and they want to walk out the winner in the Russia Ukraine conflict by getting cheap Russian Oil and Wheat/ag products. BABA has gone from 320 to 76 bucks! These countries are very dangerous.
We’ll see how the cards come out BUT in the meantime… it would be a great idea to EDUCATE YOURSELF NOW! We have Decades of Knowledge & Experience to share to help Beginning, Intermediate or Advanced Investors!
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