Category: Market Outlook

We discover an extremely rare signal on 16th April 2021, that had occurred 4 times in the past 94 years since 1927.

Historically, trading at 16% above 200 Daily Moving Average (DMA) of the S&P 500 is rare. And there are 18 trading days in which the S&P 500 traded at least 16% above the 200 DMA since the Covid lows. On 16th April 2021, the S&P 500 traded 16.22% above its 200 DMA.

In this month’s market outlook article, we aim to answer the following question – what does market history tell us about the probability of a pullback occurring, 1 year after a V-shaped rally off a recession low?

Beginning February started strong with the S&P 500 opening at 3731, and continued its unbelievable climb to another all-time high at 3,950 within two weeks. At the pinnacle of that joy ride, the markets sold off for the remaining two weeks, only for the S&P 500 to close at 3,811 for the month of February 2021.

Most of the gains made in February 2021 were given back to the market. It certainly took many investors and traders alike on a roller coaster ride!

The start of January 2021 saw the typical and traditional post US election rally since the Democrat Joe Biden became president, the Congressional House under Democrat’s control, and the Senate forced into a 50/50 neutral Democrat/Republican position with ultimate tie-breaker handed over to the Democrat Vice President Kamala Harris.

Since it is the start of 2021, we believe that a great way to kick start the year will be to provide our readers with several investment themes that are likely to play out in 2021. These ideas will be shared in this special market outlook edition.

What a difference one month makes. In last month’s October 2020 Market Outlook, we highlighted several deteriorating economic and market indicators, and advised our community of readers to exercise caution in their trading and investments.
Moving forward 1 month, it appears all these previous concerns and uncertainty have been mitigated by what many investors view as the most favourable election outcome results, whereby the Democrat President-Elect Joe Biden will have to work with a Senate still largely in control by Republican and the House’s Democrat influence curtailed.

The month of October 2020 is certainly an interesting one. The beginning of October marked an early attempt to recapture the market’s all time high levels which failed towards the middle of October. Weakness started to show in the third week’s trading session, before a significant selldown materialised in the final week.

On 2nd September 2020, the S&P 500 printed a new all time high before experiencing a maximum drawdown of 10.6% for the month of September. At the month end close, the S&P 500 was down -4.6% at 3363. Is this selldown merely a healthy correction?

The surprising news that President Trump contracted the virus last Friday has added a new element of uncertainty to the financial markets, especially given its proximity to the Presidential election next month.

In this September 2020, AlgoMerchant Special Market Outlook Edition, let us examine using macro analysis to identify the critical factors that traders and investors have to continuously assess to determine the US stock market direction in the short to medium term.