S&P 500: The Slide Could Continue
2022.09.26 11:26
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Traders have worried about a steep slide by since the beginning of 2022, as I wrote earlier. The bulls were commanding the equity markets globally, and the US was no exception.
Fundamental economic weakness continued to be overlooked globally amid political assurances by the political leaders despite a great loss to the global economy during the pandemic period.
Many measures to boost the economy have failed to spark a global economic recovery. These boosting doses were merely an effort to strengthen the political base of leaders who were busy mixing politics with economics.
This was an attempt to show fake economic prudence everywhere in the post-pandemic era (2020-2021).
S&P 500 futures monthly chart.
Finally, the equity markets tested peak levels during the last week of 2021. S&P 500 futures struggled to find a breakout above 4810 in the fourth week of the year.
They finally tested a peak on Jan. 4, 2022, at 4818 before closing the day at 4796, resulting in the formation of an ‘Exhaustive Candle’ in a daily chart which got confirmation with a bearish candle formed on Jan. 5.
This was evidence of a long-term slide while the commoners were full of bullish sentiments globally despite a recent equity slaughter in 2018 (Tariff Trade War Tussle) and 2020 (COVID-19) continued to revive the buying sprees at the peak levels while most of the companies were trading at a much higher price compared to their book value.
During the second and third quarters of the year 2022, expanded at a higher speed amid growing energy prices as Russia started to use energy as a tool to influence the West to nullify the impact of the sanctions imposed on it after it invaded Ukraine.
The strengthened a lot during this period. Precious metals declined and failed to work as a prominent tool against inflation. prices started to decline on Mar. 3, 2022, after testing a peak at $2079.
Gold headed lower along with equities, which showed that the inflationary pressure was at equal thrust over both in March 2022.
This changing phenomenon was against all odds as gold started to lose its influence as a hedging instrumental value at that time might be the first sign of recession soon as the equity bump started to prove mere a bubble.
The global equity markets are not aware of the length of the current fall and when it will stop. But they will find out soon.
Disclaimer: The author of this analysis may or may not have any position in the S&P 500 and gold futures. Readers can take any long or short trading position at their own risk. Risk-taking in trading must be taken care of before creating any trading call.
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