US30 Warning (Be careful!)
Hello traders,
Yesterday's market opening came with no surprise with it heading down before seeking for a direction nearing the close. But be warned of the further movement (reasonably downtrend) coming in the next few hours, or days or even months ahead.
Here are my reasons beyond technical analysis for the start of June.
Starting June 1st 2022, FED will begin reducing its balance sheet, so what are the economical impact it has on the market?
Let's analyse!
Since the beginning of the pandemic till last year before the FED announced plans to reduce its balance sheet,
there was huge rally upwards in stocks and equities, this was due to the ultra easy monetary policy given by the FED which also caused a boom in the housing market due to low borrowing cost.
A reduction in balance sheet will cause an acceleration to soaring housing mortgage rates and stocks to continue plummeting since March.
When the FED is taking back what they have given, treasury yields will increase significantly, which will also negatively impact stocks.
Little short history here...when FED reduced 800 billion previously, markets dropped at least 30%, now the balance sheet is around 9 TRILLION, what would you think will happen?
To make matter worse, FED is doing this concurrently while increasing interest rates. It's as bad as dropping a huge dumbell on both feet at the same time, market recovery? Fat luck.
That's all traders, be wary on how the market is going go starting this month, pair it with my previous two opinions and you will get a clearer picture why the bottom is not here yet.
And another piece of advice, don't look for the market's bottom, it doesn't end well especially in such economical situation.
Cheers, please feel free to leave your comments, stay safe!
John Connor "The whole thing goes: The future's not set. There's no fate but what we make for ourselves."
Yesterday's market opening came with no surprise with it heading down before seeking for a direction nearing the close. But be warned of the further movement (reasonably downtrend) coming in the next few hours, or days or even months ahead.
Here are my reasons beyond technical analysis for the start of June.
Starting June 1st 2022, FED will begin reducing its balance sheet, so what are the economical impact it has on the market?
Let's analyse!
Since the beginning of the pandemic till last year before the FED announced plans to reduce its balance sheet,
there was huge rally upwards in stocks and equities, this was due to the ultra easy monetary policy given by the FED which also caused a boom in the housing market due to low borrowing cost.
A reduction in balance sheet will cause an acceleration to soaring housing mortgage rates and stocks to continue plummeting since March.
When the FED is taking back what they have given, treasury yields will increase significantly, which will also negatively impact stocks.
Little short history here...when FED reduced 800 billion previously, markets dropped at least 30%, now the balance sheet is around 9 TRILLION, what would you think will happen?
To make matter worse, FED is doing this concurrently while increasing interest rates. It's as bad as dropping a huge dumbell on both feet at the same time, market recovery? Fat luck.
That's all traders, be wary on how the market is going go starting this month, pair it with my previous two opinions and you will get a clearer picture why the bottom is not here yet.
And another piece of advice, don't look for the market's bottom, it doesn't end well especially in such economical situation.
Cheers, please feel free to leave your comments, stay safe!
John Connor "The whole thing goes: The future's not set. There's no fate but what we make for ourselves."
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