Stocks bull-run? Not so sure xD

29 maj 2023

#stocks

Everyone is currently awaiting the approval of the US national debt increase and, for some reason, they think it's very bullish. But why isn't it? The S&P index is essentially stagnant, while the Nasdaq is growing. However, this growth is driven by the seven giants, and if they are removed from the list, the Nasdaq has only grown by about 1% since the beginning of the year.

Are there any positive economic factors within the US economy? No, even the Federal Reserve is considering continuing the rate hike.

Now let's take a look at what happened in previous instances of US debt increase.

On December 16, 2021, it increased by $2.5 trillion, essentially marking the peak of the trend and the beginning of the current downward movement, which resulted in a 36% decline.
On May 19, 2019, there was a downward movement of 9%.
On May 19, 2013, it went down by 7.5%.
On August 8, 2011, it rapidly declined by 13%.
These are not all instances; there are many more dates. So why should the market continue to rise now? In my opinion, it's simply a short squeeze or a bull trap, and a downward movement in the market will follow.

Even from a technical analysis perspective, the Nasdaq has completed a correction to the 0.618 Fibonacci level. They might push it up a bit more to eliminate short positions and then comfortably head towards a test of 10-11k or until the economy regains its composure and the Fed reins in inflation.