Global stock market has lost the short term growth momentum with new variable of potential US/China trade war impact on stock market, triggered by Trump latest political economy move.
The conditions for uptrend stock momentum is
US S&P500 > 2700 points
– now 2588 points, nearly break below 2581 points critical short term support
US Dow Jones Index > 25000 points
– now 23533 points, breaking below 23860 points critical short term support
US contributes to more than 50% stock value, therefore monitoring of S&P500 or Dow Jones Index help to understand the health condition of global stock market. After the 10% global stock market correction in Feb 2018 due to fear of higher US government bond yield, US stock market was recovering well above the 2 conditions above but breaking down recently due to the fear of political clashing between the Top 2 global economy, US and China.
Since the current high optimism market is more suitable for short term trading, it is important to follow the short term trend (buy when it is uptrend, sell/short when it is downtrend, wait/hold/do nothing when it is sideways) with consideration of support and resistance.
For a short term trader, safer approach is to exit first, enter again only after confirmation of short term uptrend. For an investor with higher risk tolerance level, need to monitor the level of support (aligned with own personalities) for plan for possible exit.
Political economy has added to the complexity of high optimism stock market. Volatility is getting higher, currently above critical level of 24, if sustainable above this level for more than 1 month, it will be a danger signal.
Remember global stock market is walking on a layer of thin ice now. Feel free to drop by Dr Tee next free investment course to understand the market outlook with US/China trader war impact on stock market (World, US, Singapore, China, Hong Kong).
