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Forecast for Q2 Season


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This Week Highlight - Forecast for Q2 Season
The Q2 season begins in April. Market sentiment is whipsawing with high uncertainty. Gold prices retreat back to USD1700 /oz while Dow market rattles from its record high without new strength. WTI Crude prices fell off USD60 /barrel as Dollar Index (USDX) climbs to above 93.00 level at 4-months' high. Most of all, Bitcoin has attracted huge attention from global investors but couldn't jump above the USD61,000 benchmark to rise further!

Indeed, April will be the month of highly versatile and volatile trends among many market instruments. Before end-March, President Biden announces another new infrastructure plan of USD2 Trillion to bolster post-pandemic recovery. This budget is going to be utilized as an overall improvement to lifestyle and living conditions for all Americans besides creating jobs over the next decade. Hence, it seems that Biden is confident that he will sit for 2 terms, or at least the Democrats will take charge in power for at least 8 years.

To simply our comprehension of market movement, let's take a look at the USDX first. The trend is moving up now and probably will encounter a strong selling force 94.00 - 94.50 region. The current uptrend is pushed by rising Bond yields since investors are worried of inflation due to excessive printing of Dollar by the Federal Reserve.

From mid-April onwards, financial reports of Q1 season from large U.S. companies will be released and probably will tank the stock market. After all, the U.S. stimulus plan was only rolled out in end-March and it will take effect only in Q2 season. Thus, the correction in Dollar will trigger a liquidation in Dow market and this might shift the fund back to precious metals. On the other hand, tech stocks in Nasdaq will recover and challenge 14,000 top again.

In our opinion, all ASEAN stock indexes will thread sideways and set a bull-trap in April. The sentiment of "Sell in May and walk Away" will resurface this year as the Q1 reports will be released in May among all ASEAN and Asia countries.

Finally, Bitcoin has created lots of headlines recently and people are getting feverish over this virtual money. Technically, don't be too eager to enter this market early. Be mindful to observe that we need to see a rise in Gold prices first in April and May. Only when the Gold prices reach a new year-high and correct again, then the opportunity will come to Bitcoin's turn and begin to surge.

Good luck and we hope this snippet will shed some light to your trading opinion. Care to share with your friends?

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Disclaimer: The contents are not meant to solicit or imply to any investment. You should seek the advice of a professional consultant before making such decision.


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