Chart of the Day: S&P 500 Short-Term Bulls Face-Off Medium-Term Bears
Investing.com | Nov 30, 2022 13:32
Bank of America strategists think that the S&P 500 will end up at the 4,000 level a year from now and it has cut its forecasts for the index's annual earnings per share (EPS) 9% to $200 which is 15% short of consensus estimates. Its bear-case scenario is for the S&P to slide to 3,000 on the back of falling profit margins.
According to the investment bank, the coronavirus lockdowns caused a Great Resignation which has led to a labor crisis in America. Since MACD's short MA just crossed below the long MA, demonstrating that the weakness is broader than the daily prices. At the same time, the ROC, which is more sensitive than RSI, provided a negative divergence to the price, demonstrating declining participation as the benchmark climbs, leaving it vulnerable.
Trading Strategies - Short/h2
Conservative traders should wait for the wedge to complete with a downside breakout below the 100 DMA, forming a small double-top, then wait for the return move to confirm the wedge's resistance.
Moderate traders would wait for the downside breakout.
Aggressive traders could short now.
Trade Sample
- Entry: 4,000
- Stop-Loss: 4,100
- Risk: 100 points
- Target: 3,000
- Reward: 1,000 points
- Risk-Reward Ratio: 1:10
Disclaimer: The author does not hold any of the assets mentioned in this article.
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