What is the Decoy in the Rally?

The Dow Jones And the Nasdaq 100, S&P 500 Price Outlook.

• The S&P 500 has reclaimed the psychologically important 3000 mark last week
• During this time, the Nasdaq 100 continues to edge closer to all the peaks that it saw in March
• The Dow Jones is still lagging behind, but has posted gains of its own in recent weeks

The Dow Jones and the Nasdaq 100, S&P 500 Forecast: What is the Decoy in the Rally?

The Dow Jones, the Nasdaq and the S&P 500 have continued to melt higher over the past few days, even as catalysts bull seem to spray out. After the first crash in February and early March, the gains were quickly established, in what many considered a “bear market rally”, the governments and central banks are offered assistance in many shapes and sizes.

The Nasdaq 100 of the charter Cost: 4 Hours period (February – June)

In the weeks that followed, the market, the experts attributed to the continuation of a rally slowdown of the corona virus cases, and the efficacy of the quarantine procedures. Now, for the three stock indexes are approaching previous levels, but over 40 million Americans are unemployed, bankruptcies have been declared, the supply chains have been disrupted, and other fundamental concerns have been ignited. Still, the Dow Jones, the Nasdaq and the S&P to rise. So, what exactly is a decoy, the recovery?

Well, to be sure, not all markets move must have a unique and easily identifiable catalyst. Similarly, the market can stay irrational for long periods of time, so that gains can be made, even when the underlying fundamental of the landscape may suggest otherwise. This phenomenon can be seen, at least to a certain extent, at the end of January and early February, when it was increasingly obvious to the corona virus would have become an ordeal.

The S&P 500, Crude Oil and Copper in the Daily Price Chart (October 2019 – October 2020)

– Chart created with TradingView. Taken from the A service like Twitter.

While the other equity markets, risk-sensitive currencies and commodities, such as crude oil has fallen, and WE, the three indices trudged higher still. At the time, I noted the relationship between the crude oil and the S&P 500 in emphasizing the rarity of such a divergence.

At the present time, the catalysts for a continuation of the rally, beyond all-time highs seem to be few and far between. Further, domestic unrest and could lead to the whole of the corona virus, the recovery efforts, the UNITED states and China tensions have skyrocketed. When tasks are set, it seems unlikely that the Dow Jones, the Nasdaq and the S&P 500 to reach new heights, but the other risk-sensitive assets such as australia, canada, and New Zealand Dollars have rallied, with overall appetite for risk.

Thus, it can be argued, US, stock prices have become detached from their underlying fundamentals, but short-term trading involves price, not necessarily the principles of the economy, and for weeks, or gains, suggests the current trend is still higher, however baseless it may seem.

While I am of the opinion that some of these gains will be confiscated eventually, the attempt to call the top at each location, in addition, it is presumptuous. With this in mind, it may be prudent to wait on the sidelines until a catalyst can spark sales, that is, with conviction, if you have a bearish bias, because it seems that none of the threats have triggered a move yet. In the meantime, follow @PeterHanksFX on Twitter, the updates, and keep close track of the price action in the days to come.

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–Written by Peter Hanks, senior Analyst for the DailyFX.com

Contact us, and follow Peter on Twitter @PeterHanksFX