Investors who think the worst is over had better prepare for the other shoe to drop. Stocks rallied sharply last week, reflecting the egregious miscalculation not only of bulls who have yet to meet a dip they could not buy, but also of bears who evidently fear that the crazed buying binge will continue for no good reason. They should relax, since there has never been an instance where an initial drop of 30% in the stock market did not take at least another six months to bottom.

Another reason why bears shouldn't panic to get 'em back is that in bear markets, shares tend to fall by as much as earnings. Assuming that the bottom line is halved over the next six to nine months for S&P 500 companies -- a very conservative estimate, considering the number of businesses that are either headed into bankruptcy or shuttered indefinitely --  the S&P 500 should eventually fall to at least 1700. That is miles below the current 2789, and 22% lower than the March 23 crash-landing bottom.

AAPL Is Key, as Always

As always, we'll be keeping a close eye on AAPL, the most popular stock in the portfolio world and a reliable bellwether for the stock market in good times or bad. Short-covering nuttiness has pushed the stock as high as 271.70 so far, but you should expect the rally to hit a minimum 282.45, an important Hidden Pivot resistance, before it sputters out. A commensurate targets for the E-Mini S&Ps lies at 2881, exactly 94 points above Friday's close. Enjoy the rally while it lasts, but don't get too caught up in the idea that we are seeing the V-shaped bottom that many financial advisers have told their clients to count on.

Although we often ascribe prescience to the stock market, it is actually as dumb as a fence post. It doesn't know much more than you or I about the pandemic and its future consequences, and there are therefore far too many big uncertainties for a sustained rally. Keep in mind as well that if the E-Mini S&Ps achieve the 2881 target noted above, they would be  trading just 15% below their all-time highs. Considering the extent of the damage that has befallen mankind and the global economy, it seems extremely improbably that a 15% haircut would set things right. It were as though we'd suffered but a relative moment of pain for a catastrophe that will forever change the way we live and conduct business.

Rick’s Picks trading ‘touts’ are for educational purposes only. Past performance is no guarantee of future performance. (See full disclaimer at https://www.rickackerman.com/)

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD trades firmer above 1.1300 amid upbeat market mood

EUR/USD holds the higher ground above 1.1300, as the risk-on mood weighs on the US dollar. The shared currency will remain at the mercy of the broader market sentiment as the data docket is light on Monday. 

EUR/USD News

GBP/USD off highs, around 1.2650 ahead of BOE’s Bailey

GBP/USD trims gains to trade around 1.2650 in early Europe. UK Chancellor Sunak prepares another aid package, Michael Gove pushes to prepare for Brexit. Significant differences prevail in the post-Brexit talks. BoE’s Bailey to speak later today.

GBP/USD News

Gold sits near daily tops, just below $1810 level

A combination of supporting factors assisted gold to regain positive traction on Monday. Sustained USD selling remained supportive amid concerns about rising COVID-19 cases. The prevalent risk-on mood might turn out to be the only factor capping any strong gains.

Gold News

FX Today: Vaccine, earnings optimism downs the dollar; eyes on COVID-19 stats, BOE’s Bailey

The risk-on sentiment emerged as the main market driver starting out the week, amid a quiet Asian affair, in the absence of relevant macro news. US dollar remained on the back foot, as the coronavirus vaccine optimism continued to dull its safe-haven appeal.

Read more

WTI: 200-HMA probes bears above $40.00

WTI stays pressured beyond $40.00 despite multiple bounces off 200-HMA. MACD conditions suggest bears rolling up their sleeves for entry. Bulls will have multiple upside barriers beyond $41.00.

Oil News

Forex Majors

Cryptocurrencies

Signatures