
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
2021-11-08 • Updated
If we look back at the previous year, we will remember the amount of fear that gripped us when the black swan, Covid-19, appeared. It was especially visible in the performance of the US stock market. In February, S&P500 dropped from the all-time high at $3 397 to the levels around $2 270. At the same time, NASDAQ corrected by 32% from the high of $9 760. While market newbies were affected by this storm, smart people started to "buy the dips" and await further momentum. The market did not make them wait forever. After the Fed and other major central banks began to pump cash into the economy and implement loose monetary policy, the demand for the risky assets increased. As a result, the indexes retested their highest levels in the middle of 2020. The end of the year was driven by the optimistic news on vaccine distribution and the US election's outcome. Since then, S&P and NASDAQ have been reaching new peaks almost every month.
As natural as it is, a bullish market attracts everyone. However, if you are familiar with Benjamin Graham’s works, you know how dangerous the market euphoria is. The worrying signals have already appeared. According to Bloomberg, an average of 15.8 billion shares have traded daily over the past 20 days. This is the highest spike in volatility since last year's sell-off at the start of the pandemic. Some people see this market frenzy as speculation that does not have any fundamental bias. So, what should we expect: a crash of the market or just a short-term correction?
Most analysts don't expect a pop of the market bubble soon, but they confirm that a 10-20% correction to the current highs is an inevitable scenario. They note that the current bullish ride is driven by earnings growth, which is torn off market-based fundamentals. Additionally, vaccine-related optimism may lead central banks to monetary policy tightening, limiting cash in the economy. However, the chances of this event happening soon are very low.
The Bank of America expects a 5-10% correction as soon as in April. According to the bank, investors should not be afraid of the slump, as it will provide a buying opportunity. Analysts from Jefferies Group have a similar opinion. They anticipate 2021 to be “at best a flat year” for stocks.
A long-term trader may wait for the correction to buy cheaper stocks and indices. If you are a swing trader or an intraday trader, then you just need to stay calm, follow the daily news, track risk sentiment, and don't forget about money management. This way, market swings won't affect you.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
More and more analysts are sure Brent oil will surpass $100 a barrel. So how heavily will oil move the markets, and what will the direction of the movement be? Let's find out!
Bloomberg reported that ‘the S&P 500 Energy Index has outperformed the broader S&P 500 by 21 percentage points so far this year'.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
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.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
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