US markets have had an incredibly bearish year to say the least. However, it seems as though things are starting to turn around. After everything seemed to have bottomed out on September 28th, we’ve seen an impressive recovery in the making. However, there’s a big questions looming over head… Can the rally really continue? I hate to be the bearer of bad news, but I have to say that I think the answer to this question is “No”. Today, we’ll talk about why.
Let’s Start With China
While many experts blame the China market and economy crash for the declines we’ve seen in the US market this year, I believe that the problems were long in the making. The Chinese market and economic issues were simply the straw that broke the camel’s back. Nonetheless, the Chinese economy does play a major role in the United States market. After all, we live in a world where countries trade with each other. With that said, experts were hoping that we would see economic improvements in China. If this was to happen, US products would be purchased more in the region, giving US markets a boost. However, economic news out of the region today was anything but positive. As a matter of fact, a recent report showed that China’s economic growth has slowed even further; which is likely to put more pressure on US markets.
Oil Took A Big Hit Today
Another major concern for the US market is the energy sector. In the United States, the energy sector plays a crucial role in the market performance. In fact, today’s news put pressure on both the Dow Jones and the S&P 500. So, what’s the news? It seems as though the Iranian Nuclear Deal will be going through. Today, the deal was formally accepted. Under this deal, the United States will lift sanctions on Iran in exchange for the country’s willingness to follow stringent rules with regard to nuclear capabilities. When the sanctions are lifted, Iran’s oil will flood the market. Since Iran is one of the world’s largest oil producers, this will add to the supply glut issue, putting further pressure on the oil market.
The US Has It’s Own Economic Issues
Finally, let’s cut China and Iran completely out of the equation. Even without the issues from China and Iran, the US isn’t looking so great at the moment on its own. While the US economy was doing incredibly well, the year 2015 hasn’t been so great; and it seems to be getting worse as the year goes on. In August and September, jobs faltered. Not to mention consumers aren’t spending as much and the market is overvalued. All of this together is creating the perfect storm; one which one of my idols, Carl Icahn explained would make some of the rough times we’ve seen over the past several decades look good.
How To Take Advantage Of The Trends
In the short term, we’re likely to see more growth. However, in the long term, we’re headed for drastic declines. With that said, binary options traders should be watching for call option opportunities at the moment. However, it’s also important to watch the news. As the worries become more fierce, start looking for puts to follow the downtrends to profit.
What Do You Think?
Where do you think US markets are headed and why? Let us know in the comments below!
[Image Courtesy of The Telegraph]