The US Stock Markets Plunge

The US Stock Markets Plunge

The S&P500 fell by over 6% last week with many traders taking a big chunk of profit from the markets.

Our uptrend line was clearly broken which was the key signal that a big move down was imminent. So what was the drivers behind the move?

1: Interest Rate Hikes

President Trump is blaming the FED as he believes their recent interest rates hikes is why investors are dumping their stocks so they can put their money into safer deposit accounts with these new higher rates. (3 interest rates hikes so far this year)

2: Trade Wars

Another possible reason is that Trumps trade war with China is finally biting the US economy as it is creating higher production costs for US companies resulting in lower sales. China’s two main stock markets also tumbled by 5.2% and 6.5%.

2: Fear

The S&P 500 is trading at 33 times its average long term earnings, meaning that it has never been this overvalued in the history of the stock markets. Maybe investors are just getting very nervous and are dumping their stocks.

There is no doubt that the big sell off is coming. (30%+) When this will happen is impossible to predict. As traders we have to make sure that we analyse the charts for signals, stay tuned in to the key news driving the markets and get our timing right.

There will be many buy and sell opportunities on offer over the coming weeks as the market decides whether this was just a temporary blip or we will see a reversal back up to the previous highs.

Don’t miss the next big move!

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