The S&P500 futures have shown a remarkable recovery from their lower level of 2728. We increased long positions above the 200 day moving average at 2770. We have taken profit at 2850, 2880, and 2900. Current price is 2897. The sharp recovery in S&P500 is very bullish, and such a recovery gives a hope that the next attempt to 3000 will succeed.
The S&P500 futures are likely to retest 2850 at least once before moving up towards 2950. So traders can take profits at current 2895-2900 level, and buy again at lower level. We should stay long above 2800 for target 3000. There will be a strong support now between 2770 and 2800. Ideally, the futures should not even go in that zone.
Crude Oil (WTI) is bearish at current price $55. It is safe for long trade only above 60, or from a much lower level like 45. Below 60, is constant weakness. Near term downside targets are 52 and 50. A weekly closing above 60 is needed for crude to become bullish again. 43-45 is a good long term support level, and that’s a good buying zone for reversal to 60.
Crude Oil is facing multiple demand-supply factors. The most important factor is the slow global GDP growth, and the further downside risk from US-China trade war, on global economy. The periodic political attempts to create supply constraints are not working, because the market has realized that there is enough supply at the $50-60 level. This is also a lesson for the crude oil producers not jack up prices at every opportunity, otherwise the consequent falls will be even sharper.
We don’t need rock bottom crude prices – that’s good for nobody in longer term, in an interlinked global economy. But as long as we have crude between $50-60, it should be okay and supportive for global GDP growth.
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