Is It a Good Idea to Buy Stocks Now?
During the last month, the stock market went up without any particular reasons for it. The index of American companies with the largest capitalization S&P500 shows that ‘bears’ already got a margin call.
As a result,
The markets are on the verge of a global turn and the crisis is over
It is only fake growth and soon the market will continue to fall
On the one hand, good news can play into the American stock market’s hands. For example, an upcoming meeting of the U.S. Federal Reserve System (FED) scheduled for January 29-30 can mitigate the American watchdog’s monetary policy this year, as in December 2018 the FED acknowledged the growing risks for a further interest rate rise and changed the forecast on the amount of its hikes for 2019 from 3 to 2. Besides, the U.S. president Donald Trump is negotiating with China and even discussing (https://www.wsj.com/articles/u-s-weighs-lifting-china-tariffs-to-hasten-trade-deal-calm-markets-11547754006?tesla=y&mod=e2tw) incentives for Beijing to make deeper concessions in a trade battle.
On the other hand, negative news may facilitate another market’s crash. Here are some of them:
▪️ China claimed that its economy’s growth will slow down in 2019 and the GDP indicators will be worse than in 2018.
▪️ Even if the USA reaches an agreement with China, China itself may face new tax burdens which will affect prices not in favor of final consumers.
▪️ The U.S. economy is not doing well.
▪️ France launched taxes for big tech giants like Apple, Google, Amazon and others, EU is considering its own ‘digital services tax’ too.
▪️ Israeli airstrikes hit Damascus
The American market hit the bottom in December 2018 which coincided with sufficient growth of fear level among the investors. Now everything is changing (https://money.cnn.com/data/fear-and-greed): fear has disappeared but the investors have not got greedy for stocks yet. It proves that the ‘bulls’ will continue to hold the line and drive the market up but temporarily.
The American stock market does not seem attractive. We think that S&P500 is ready for a deeper decline. Tech giants Apple and Tesla already have problems as their stocks lost 10-15% of its price. That’s why we do not recommend you to buy stocks in the foreseeable future.