SPXThe week ahead is best characterized as do-or-die for the Bulls and institutional buyers. Do buyers or sellers have a stronger case to control market direction into Q1 earnings season? More from Ziad Jasani of the Independent Investor Institute in weekly video and commentary.

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Here is Ziad’s market strategy video recorded today:

Recorded: April 9, 2018.
Duration: 1:04:12.

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Buyer’s Case:

• Deeply oversold conditions almost everywhere
• Major market indexes are ~2 Std Dev on cheap side of 52-week routines
• The S&P 500 & global equity market holding above their 200-day averages
• Longer-term market breadth still Bullish
• Longer-term up-trends still intact
• Q1 earnings expected to delight
• Commodities holding-up
• Currently, only a 20% probability of a 4th U.S. rate hike
• Institutions have not hit the sell button in any significant way.

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Seller’s Case:

• Quantitative Easing transitioning to Quantitative Tightening (less liquidity, higher rates, stronger USD?)
• Global debt at all-time-highs, debt service costs rising for people and governments
• Fractures in synchronized global growth engine deepening
• Clear signs of consumption slowing that may weaken EPS outlook; U.S. consumer credit in steady decline since Nov. 2017 peak, defaults rising
• Equity valuations still “obscene”
• Volatility is elevated
• Trade war theatre still in Act 2 of 3
• Inflation-creep still in motion and global bond market is vulnerable
• Trump’s cabinet chaos continues + now Pompeo and Bolton are war risks
• Geo-political risks (Russia, Syria, North Korea) still high
• Big Tech and  Big Data under regulatory scrutiny since Facebook-Cambridge
• New U.S. Fed Chair Powell demonstrated he will take rates up 3-4 times this year as long as data supports it, and he’s not concerned about equity market response.

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As you decide which case is stronger, we can theorize three high probability scenarios for the week ahead:

• (A) Strong Bullish ↑: Signal à S&P 500 (SPX) directly rises and holds above 2,620.
• (B) Dump’n’ Pump ↓ Then ↑: Signal à S&P 500 < 200-Day (2,593) then > 2,620.
• (C) Strong Bearish ↓: Signal à S&P 500 breaks Feb. 9 lows (2,533) and stays below heading to 2,417 (late Summer 2017 lows).

The ideal outcome this week is Scenario A or B (which our Trader Community supports 2 to 1 vs. Scenario C). But we must be prepared for Scenario C.

View the Independent Investor Institute trading ideas and strategies videos here.