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Stocks Are Bullish, But Pullbacks Are Inevitable As No Fear May Bring The Fear

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Mar 30 2021

Hello traders and investors!

Today we will talk about stocks and correlated markets that can be indicating for a potential slow down in the next few sessions.

Regarding stocks, it's important to keep an eye on VIX (Volatility Index), which is seen at very low levels, meaning investors are not worried about the potential drop on stock price, but we know that market moves in cycles so when there is no fear it may suggest that we may see the opposite reaction. Volatility could pick up in the next few months and normally that's the case when stocks are coming down.

Why we think that there can be some reversals coming in the markets are definitely Emerging markets (EEM) where price is coming out of an EW channel after a completed five-wave cycle, therefore a three-wave (A)-(B)-(C) setback can see more weakness.

Next very important market for positive economic cycle is Crude oil, where higher price is caused by higher demand which comes out of economic activity. But energy is turning down now, so can be first indication for a potential lower stock prices in weeks ahead. And it's also important to mention that S&P500 can be approaching 4k psychological level within a potential wedge pattern, known as a reversal pattern.

With that being said, we think that it's good to be aware of a potential reversals in weeks ahead and be properly prepared rather then negatively surprised. I believe that these markets have room for more upside but retracement are healthy and almost needed at this point to attract new buyers at better price levels.

Trade well,

GH

Be humble and trade/invest smart!




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