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USA500

Market Opportunities - 14/09/2021

14 September, 2021

The example below uses Contracts For Difference (CFDs). Calculations are only on the price of the specific instrument on the date below and calculations indicate a possible opportunity for profit or loss. No representation or warranty is given as to the accuracy or completeness of this information, consequently any person acting on it does so entirely at their own risk.

USA500 weekly downtrend opportunity based On 1.00 Lot Calculation:

  • DESCRIPTION: The USA500 is a capitalization weighted index of 500 largest stocks listed in the United States.
  • CENTRAL BANKS WHISPERING END OF STIMULUS PROGRAMS: The United States and the world is coming out of a period of unprecedented fiscal and monetary stimulus that was engineered to counter the effect of all of the virus related lockdowns which crushed multiple segments of all economies. The U.S. Federal Reserve alone increased its balance sheet by $4 trillion. Almost all of these unprecedented fiscal and monetary interventions are coming to an end or being tapered lower.
  • SLOWING ECONOMIC GROWTH: The economic data is starting to show cracks in the economy. Retail Sales in the United States declined in July. Consumer Confidence is falling, and now inflation is on the rise putting a further squeeze on the disposable income of consumers. Both Goldman Sachs and Morgan Stanley have lowered their 3rd Quarter GDP forecasts significantly.
  • BIG WALL STREET BANKS SEE AN IMMINENT CORRECTION OF 10% to 20%: While many of the leading issues have benefitted from the above excess stimulus in the system, many will now suffer that the programs are coming to an end. The six largest Wall St. banks are predicting a hard or soft correction in the near future. They are Morgan Stanley, Bank of America, Deutsche Bank, Citigroup, Credit Suisse, and Goldman Sachs.
  • WARREN BUFFETT INDICATOR SUGGESTS CORRECTION: The Buffett Indicator, which is the ratio of the value of the stock market to the GDP of the economy, was at 241% on September 9, 2021. Its long term average is 120%. It indicates a stock market that is severely over-valued.
  • STATISTICS (2016-2020): There has been an autumn stock market correction in each of the last 5 years. The average drop was 10%.
  • TECHNICAL INDICATORS SUGGEST THE INDEX HAS BEEN OVERBOUGHT, TRADING CLOSE TO ITS RECORD HIGH: The USA500 is overbought based on multiple technical indicators, including the RSI, the MACD, and the Stochastic indicators. The index as a whole is poised for a reversal based on these technical indicators.

USA500, September 14, 2021
Current Price: 4,470.00

USA500

Weekly

Trend direction

DOWN

Resistance 3

5,000.00

Resistance 2

4,820.00

Resistance 1

4,650.00

Support 1

4,240.00

Support 2

4,000.00

Support 3

3,750.00

Example of calculation base on weekly trend direction for 1.00 Lot*

USA500

Pivot Points

Resistance 3

Resistance 2

Resistance 1

Support 1

Support 2

Support 3

Profit or loss in $

-5,300.00

-3,500.00

-1,800.00

2,300.00

4,700.00

7,200.00

Profit or loss in €**

-4,482.03

-2,959.83

-1,522.20

1,945.03

3,974.63

6,088.79

Profit or loss in £**

-3,816.96

-2,520.63

-1,296.33

1,656.42

3,384.85

5,185.30

Profit or loss in C$**

-6,702.54

-4,426.21

-2,276.33

2,908.65

5,943.76

9,105.34

* 1.00 lot is equivalent of 10 units
** Calculations for exchange rate used as of 14:51 (GMT+1) 14/09/2021
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Client Manager regarding their use.
*** You may wish to consider closing your position in profit, even if it is lower than suggested one
**** Trailing stop technique can protect the profit – Ask your Client Manager for more details

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