The potential of US Economic crisis and recession phase for global market in 2019 based on S&P 500 Index
S&P 500 is one of the biggest, oldest and most recognized ETF in the world, it has the biggest AUM in the world. Other than that, the S&P 500 committee choose 500 securities institution that represent the US largest capitalization. Therefore, every movement of this largest index in the world will greatly affects other market.
On this article, I will provide a really detailed technical analysis about what is likely to happen on SPY index on 2019. As a technical analyst, we always look at the biggest time frame to define and determine a major trend of the index. look at this chart below :
From above chart, we can see that on the biggest time frame (yearly chart) is still trending up. and look at this year’s candle, it shows that SPY is really bearish, with a possible engulfing candle in the end of 2018. now let’s see the monthly chart on SPY :
From the chart above, we can see a really nasty bearish candle that has already formed since the beginning of December 2018, the green line is a 21 EMA line, purple line is 55-EMA, and red line is 200 EMA. and the black horizontal line is a possible support that can held SPY based on price action. for this weekly chart we can see that SPY has broke EMA 21 which acts as a dynamic resistance for this particular index, the next dynamic resistance that has a possibility to held the SPY price is 55 EMA line, but in my opinion we are going to break this particular resistance. why? let’s do an elliot wave count!
Like what I have mentioned on the very first paragraph before, I am a technical analyst with a special ability to do an elliot wave analysis on every trade that I am in. therefore I will do an elliot wave count too on SPY.
First, When I look at this chart, The most crucial point that I have been concerned about is we are trending up since February 2009, and it has been a long time (113 months). whenever the market is trending too long and far, it usually retrace viciously and hard, whether it is an uptrend or downtrend. that’s why I am trying to solve and count the sub wave of this particular period (from February 2009–2018) and find out that SPY has finished its 5 wave count and yes, it is time to retrace. and the biggest question is “When is the good time to go long or buy?” based on my opinion and important guideline on elliot wave, I will assume that SPY will finds its lowest level at red box region which ranged between $180-$145 region. this is a really strong support based on fibonacci level, which known as a golden pocket region. and if this golden pocket region can’t hold the falling price, we might see SPY to drop really hard and vicious to $66 region and we will need hundreds of year for this market to recover.
After we discuss some factors from technical perspective, we will see a little important news from the fundamental perspective too. The most intense fundamental that has occurred since mid of 2018 is trade war between China and USA. I am sure that the news will have a great effect on both countries. Trade war occur because USA feel threatened with China’s product and company that can reduce the United State’s GDP in the future. In my opinion, as long as this policy can increase the GDP of USA, we don’t have to be worry about this. but, if this policy can’t increase the GDP of US, it will cause a massive effect on market. I will not discuss more detail on this fundamental news, because honestly I don’t trust fundamental and I am a pure technical trader.
So, My conclusion is we are going to face a recession phase on 2019, 2020 and probably the beginning of 2021. which will be vicious in my opinion and we will see a massive drop in some several stocks between this period. so be careful and be wise to manage your portfolio.
Founder of CPRO Cryptocurrency Advisory