...yes, fundamentals do not count as they used to, until and unless they affect the big techs in a material way , large enough to cause a bigger move to the downside for the S&P500.
...fact is the S&P500 is dominated by some 7 large stocks (mainly tech) and their market dominance ensures that in whatever economic environment, they would still grow their business. In addition, many stocks have already been slaughtered to a large degree more than what the major indices suggest. And over time, as the S&P500 and Nasdaq show greater stability and less volatility, market participants would move quickly to buy up much oversold non-indexed linked stocks (that have continued growth potential) , in fact this is already happening in US markets where many stocks that have previously lost 80% of their value from their peak have already doubled their values over the past month. We are somewhat slower on ASX to act , as market participants so far showed little imagination beyond chasing lithium and energy stocks. And when commodities are on the backfoot, they're not looking at non-commodity related stocks, in industrials , tech, property, biotech micro and small caps as IMO we have abundant opportunities there for potential medium term sizeable gains.
S&P 500 Forecast: Attempting Major Breakout
By Christopher Lewis of Daily Forex
Tuesday, August 16, 2022 5:35 AM EDT
The S&P 500 Index rallied on Monday again after initially falling.
It now looks as if we are going to do everything we can to break above the 4300 level, and that opens up the possibility of a bit of a “melt-up”.
There’s nothing truly keeping the market back other than the 200-day EMA, an indicator that is only somewhat reliable.
S&P 500 Likely To Break Out to Upside
Keep in mind that these markets run on liquidity and not what’s going on in the economy unless of course, it’s good news. Because of this, I think that this market probably does break out to the upside and continues going much higher, mainly due to the fact that there doesn’t seem to be anything that can dissuade buyers from coming in and taking advantage of the “cheap pricing.” Keep in mind that this is about liquidity, and it’s obvious that the market believes the Federal Reserve will do whatever it tells it to, and right now is telling the Federal Reserve to be loose with its monetary policy.
The bond market also doesn’t buy the Federal Reserve being able to tighten either, and that has had its own emphasis on potential flooding of liquidity. As long as there is liquidity, stocks go higher because that’s what Wall Street’s been trained to do. The Federal Reserve has been complicit in pumping up a massive asset bubble and has raised an entire generation of traders that know nothing else but pay attention to what the bond market and liquidity is doing. Fundamentals do not matter anymore, and unfortunately, there are a lot of retail traders out there wasting their time looking at P/E ratios, expense reports, etc.
The game has changed quite drastically because most of the volume is done with high-frequency trading machines looking at mathematical patterns, not anything to do with the stock that they are trading. Quite frankly, it’s just an algorithm that gets followed. I know this sounds pessimistic, but once you understand the game you’re playing, you can begin to score some points. At this point, it’s almost impossible to short this market and we are so close to a major breakout it’s unreal. Yes, there are a lot of bearish cases to be made out there, but it’s obvious that Wall Street doesn’t care. As long as it’s going to be the case, you can either argue with Wall Street, or make money.
