S&P forecast: The S&P 500 made a new all-time high in line with my forecast, the FTSE is struggling to move higher. I think the trend has turned down in the FTSE, but the S&P is still in its uptrend near the top. The pound has dropped sharply below the breakout point following comments Scotland will seek a second referendum. We are waiting for the big event tonight at 9pm when Trump speaks, this could move the market either way. This event occurs at the end of an Elliott wave which is the current rally, so whatever happens tonight the trend should turn down.
When people expect something they will buy in anticipation, the news becomes priced in. This is what happened in the last three weeks, investors bought the rumour. If the rumour is true the market won’t go up, S&P may or may not push to 2380 then it will decline. If the rumour is not true or does not meet expectations the market will decline immediately. If the rumour is true and Trump announced something new and bullish that was not known previously the market will rally. As you can see they are various scenarios and the most likely is a decline because the news is priced in.
Despite this we can’t rule out a rally tonight, this is why I don’t recommend to take a position before the announcement (unless you are happy to take the risk). The best time to trade is when there is no news or when the news has little influence on the market. So far Trump has spent more time boosting the stock market than running the country, his latest move was to announce plans for increased funding on infrastructure and defence spending. As a result the S&P rally extended last night. But the rally is tired, as noted the FTSE has already turned down, this weakness could remain for a while if the S&P turns down and the pound rallies as I suspect.
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