The Market Ups Amid Recession Fear

The Nasdaq Composite was up 12.3% in July, one of the best months for the index in history. The market seemingly anticipate that the Fed would soon begin to back off from its aggressive rate hiking plan as inflation concern aggravated while inflation continue to ease. But Minneapolis Fed Pres Neel Kashkari said that “we’re still a long way from 2% inflation, which suggests further large interest rate hikes. It seems like the market prefers to believe inflation is improving although We all learned from the history that premature withdrawal from hawkish rate policy could fail to tame inflation eventually.

The market rebounded aggressively since its 50MA broke out. Soon the SPX will challenge the first resistance around 4177 although it has been a little overbought after two weeks rally. A pullback won’t be surprised as well as its support (50MA) remain valid within the ascended triangle. The recent market movement is encouraging, however, the descending upper trendline that has been forming since the beginning of the year remind us that market has still not walked out the woods, and a swift and powerful rally is the characteristics of bear market. Conversely, The Bank of America sentiment indicator pointed to extreme bearishness in mid -June when the market reached the lowest level since December 2020, the indicator hit 0 for the first time and has remained there for four consecutive weeks. Which could be a sign of capitulation means bullish !

Technically, weekly Coppock has formed upper curve along with MACD and Stochastics reversal. All of which indicated a tradable rally has been forming, but too early to predict if the market has bottomed out, especially, both of long term MA (200) and descending upper trendline that was built half year ago as the significant resistances have not been breaking out to confirm the reversal. Be patient!

Followed by the worst half year in 50 years of S&P500 history. The S&P 500 had its best month (12.03%) since November 2020. While our Long-term investment portfolio gained 14.83%, made its total return to 49.49% since the inception, May 2020 (click for our latest portfolio performance report). Our Dynamic investment portfolio gained 13.35% made its total return to 9.28% since May 2020. on the other hand, the bitcoin (BTC) finally took a breath with a 23% return for the July, while our crypto portfolio which allocates with 50% of BTC and 50% of ETH had a 44.63% return for the month. In contrast to the extreme volatile crypto investments, over 20% of our matured structured investments received an averaged 17% of return that shows its resilience and capability to offset the volatility risk. As the bear market is moving to the late phase, we anticipate a higher return ahead for the investments as well.

Recently, the Wikipedia has blocked new users from editing its recession page because people keep changing the definition as the recession debate is getting more intense. There are no easy answers and foolproof methods for the big economic question as well as the market’s next move but wait until the last moment that the descending tringle breakout happens as a reflection of sentimental changes and shifts in this crazy market.