During the last couple of weeks we have been noticing a decrease in correlation between European and US markets.
Europe is facing mixed macroeconomic results, inflationary pressures, political turmoil from Brexit and Italy and turbulences from the Turkish Lira. The ECB is also on the verge to begin the process of its easy money exit. The US markets on the other hand are very strong at the moment with the GDP on a constant growth and low unemployment rate. With this we can also add a strong consumer confidence and retail sales without forgetting that the FED is continuing the process of normalization in interest rates.
How will the S&P500 move?
The tendency is for an upside move and for the time being there do not seem to be any indication of a market fall.
We must, therefore, set a scenario capable of making us move well in the shorter term. It is only in case of a correction exceeding 20% (which we have not seen in 9 years) we will change our strategy. Until then however, we will follow the trend.
Observing the chart you can see a good resistance in area 2925 which could stretch towards 3000 points for the next month or so.
However, this area could offer an important short-term SHORT opportunity with the objective price around the area of 2877-89.
Article written by Giancarlo Prisco