2022-12-16 • Updated
Nobody even would be dare to say that such indices like S&P 500, Dow Jones, or Nasdaq will drop in the long term. It’s clear for everybody these well-known indices will rally up no matter what. Even Warren Buffet, one of the most famous investors, has advised his trustees to invest 90% of the money he will leave to his wife in a very low-cost S&P 500 index fund.
This is good advice for newbies and risk-averse investors. However, if you are willing to take a higher amount of risk to increase the potential size of your profit, you should invest the larger part of your capital into stocks. Let’s say 50% into stocks, 50% into indices (in this example we eliminate currency pairs and other assets).
Anyway, almost every investor has stock indices in his/her portfolio as they have one key advantage. An index, especially the popular one like S&P 500 or NASDAQ, is a low-risk investment as it’s an already diversified asset. If one stock loses its value, the other one will rise and offset the losses. Yes, the growth wouldn’t be too fast as some individual stocks may offer, but you will save yourself from unexpected huge losses. It's a so-called trade-off.
What stock indices to trade in May?
Tech outlook of S&P 500
US 500 (S&P 500) has just broken the psychological level of 4200. Thus, the way up to 4300 is clear now. However, the index wouldn’t grow fast to that price target, it’s likely to have struggled to move above the resistance zone of 4200-4250 as there is the upper line of Bollinger Bands, which the S&P 500 has failed to cross many times. Besides, keep an eye on the RSI indicator. Once it’s above 70.00, it will signal the index is overbought and thus it’s likely to reverse down.
It should be interesting to trade S&P 500 during NFP. If the report is better-than-expected, it may confirm bullish trends and help the stock index to rally up further. On the flip side, the poor NFP figures may worsen the market sentiment and trigger the sell-off of the index.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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