The big question: what will happen to the SP500 in the following weeks?



With the SP500 correcting today very strong (SPX +1.28% now) for the second consecutive session since its sell-off last Wednesday, the big question on Wall Street is if this rebound is reliable, that is, if finally, its pullback finished, reaching a short-term low at 2,825. Can you take advantage of the occasion buy-the-dip trades right now? 

JPMorgan JPM publishes it clearly today: don't buy the dip until September. Personally, as trader, I think it's the healthiest and cautious decision. World central banks reducing its interest rates (near in 30 countries this year), an inverted yield curve in the benchmark US T-Bond 2/10 spread (a clear signal of the beginning of a recession sharpen by the Trade War), are so strong economic signs to set aside. 

Some private indicators, as the Fear & Greed Index from CNN Business show its number in 26. As it is a contrarian indicator, the buy signal is activated only in values below 20, but take note that it's ascending from its last week value in 23 (extreme fear) and 44 (fear) since one month. Panic is not yet in the markets.


One of the most popular free market indicators is the Fear & Greed from CNN Money,  well followed by smart investors. 




Same behavior shows the Hulbert Stock Newsletter Sentiment Index from the recognized investor Mark Hulbert: below zero show market in capitulation and an ideal place to make a buy-the-dip trade. Also check that the market rebound in June, matches with this indicator in that month: today we are at the same level. Hulbert told, about the actual stock market situation: Undoubtedly, the market could recover before such low readings are recorded. But if it does, that rally will be built on a relatively weak feeling base.  Agree.


The HSNSI index is approaching the zero level, usually a buy signal, as it works as a contrary indicator.