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Forecast and levels for S&P 500 - page 19

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One factor that has supported the European stocks, especially the more cyclical ones, has been the retreat of the Euro. Technically, the main support of the European currency is located in the 1.1470 area. However, if the Euro starts trading above 1.1660, the likelihood of a short-term recovery becomes more robust.

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With respect to the domestic market, the Commerce Department reported that the US economy grew 3% in the third quarter, surpassing economists’ forecasts of 2.50%. If we exclude the “inventories” effect, GDP grew by 2.30%. 

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The recovery of the Euro Zone economy continues to gain momentum. The Euro Zone grew 2.5% in the third quarter of this year compared to the same period in 2016, the strongest pace since the start of 2011. This result allows the euro countries to take off from the United Kingdom, as well as from the United States.

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After yesterday’s strong valuation of the DAX, we could see some profit taking by some investors of very short term, the so-called fast money.

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Dow Jones Industrial Average is holding above the 10-week moving average that should provide a good dynamic support for next week.

Expecting a downward move to a Fibonacci retracement at 22,650 on a break below the previous week low at 23,201 however a break above the 2017 high at 23,435 may set in motion another bullish run to a Fibonacci extension at 24,111.

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The positive trend on Wall Street continued at the beginning of the week as the end of the earnings season approached. Broadcom has officially launched the takeover bid for Qualcomm, which is the largest technology operation ever, valued at 103,000 M.USD. Advanced Micro Devices was up 5.90% on news that it plans to partner with Intel to form a personal computer chip unit. Meanwhile, investors were also paying attention to President Donald Trump's statements during his visit yo Asia, concerning North Korea's nuclear missile program and foreign trade.

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In a scenario of a slowdown in the release of corporate results, some stocks renewed new highs, even though stock indexes kept fluctuating.

Sergey Golubev
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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2017.11.08 08:57

A 5-year annualized S&P 500 return of 10% or more has never produced an annualized return of over 10% during the next 5 years (based on the article)

Price on the daily chart is on bullish breakout for 2,593 resistance level to be breaking for the bullish trend to be continuing.


  • "One of the biggest challenges facing investment advisors and professional investment managers today is a simple aspect of human nature: getting their clients to avoid emotional extremes in their view of investment returns.  Investment emotions often take on an air of “short-term-ism” whereby recent returns are extrapolated forward.  That is, investors assume that what just happened over the past X weeks, months or years will repeat itself in the next X weeks, months or years.  In stock market history, such an assumption is about as far away from reality as it gets.  So, I conducted a study to put into numbers what my team and I have seen over and over in our collective investment careers."
  • "Specifically, I looked at the 5-year annualized return of the S&P 500 Index as of the end of each month (also known as “rolling” 5-year periods) since 1995.  There were 182 such time periods, so plenty of data from which to draw conclusions.  I divided those 182 periods into two groups: those in which the 5-year annualized return of the S&P 500 was at least 10% (let’s call this Group A), and those in which it was less than 10% (let’s call this Group B).  I wanted to see to what extent a 5-year run of strong returns could continue, since that is what many confident investors are thinking will happen from here forward.  For a current reference point, the S&P 500’s 5-year return as of 7/31/17 is 12.36%, so it lands solidly in Group A.  After all, anyone who has invested in an S&P 500 index fund for the past 5 years must be thrilled."

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Chart was made on MT5 with Brainwashing system/AscTrend system (MT5) from this thread (free to download) together with following indicators:

Same system for MT4:

  1. Brainwashing. Trades: manually and using EAs (MT4)
  2. Brainwashing EAs - the thread (MT4)
  3. Brainwashing: system setup for trading manually and for EAs (MT4) - the thread 
  4. Brainwashing: system development (MT4) - the thread

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With the economy expanding to 3% and with interest rates at low levels, many companies are tempted to expand through mergers. With funding rates at historically low levels, a merger or acquisition may be the fastest route for a company to increase its size and market share. 

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In US the budget committee warned that the proposed Republican tax reform would increase the public deficit by more than 300,000 M.USD than estimated by this proposal. Accordingly, the deficit threshold approved by the Senate (1 500 000 000 M.USD) would be exceeded. Today’s session is expected to be conditioned by the behavior of oil, the presentation of the results of some retailers such as Kohl’s and Macy’s (which signals the end of the earnings season), possible developments regarding the tax reform and news related to the visit President Trump to China.

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