Hey what's going on everyone, i hope you're having a great day, i'm matt and i'm back at it again with another technical analysis update for the overall market, but before i dive into that, i want to share with you the typical seasonal bias of the month of July - and i also want to cover some recent economic news if you're interested in this type of content subscribe to the channel, i want you to know that your support is truly appreciated. Don't forget to turn on your notifications, so you don't miss any of the new videos since it's the first day of july. I thought it could be helpful for me to share how the s p 500 typically does in this month to do this. I tested every july over the past 20 years.

More specifically, i simulated what would happen if i bought 100 shares of spy on the first day of july right when the market opened and then sold that position on the last day of july. When the market closed, this simulated trade was slightly profitable in the year 2019, but let's take a look at how it's done all the way. Back to the year 2000 out of 20 trades 65 were profitable. That means over the past two decades, 13 julys were positive.

On top of that, when you consider the gross profit against the gross loss, the overall profit factor was 2.23. In other words, the gross profit was over two times larger than the gross loss. This tells me it's better to be a bull in the month of july, but before we move on, let's check out the equity curve of this simulation from 2000 until 2008, the month of july seemed to favor the bears from 2008. Until now the bulls have been in control.

I don't want you to have the misconception that this information means july will definitively be a positive month. All it really tells us is that july typically favors the bulls, but that doesn't mean things can change the purpose. In me, sharing this was to give you a better idea of the historical precedent set by the s p 500 within the month of july. It's always good to know the seasonal framework you're currently dealing with.

I recently posted a video about a seasonal trade idea for the month of july that takes advantage of the strongest days within the month if you're interested in that trading strategy. There's a link in the description now that we've thoroughly covered what's happened in the past. Let's take a look at what the market's doing right now, the recent economic news has been all over the place. The minutes from the fed's fomc meeting were released today, and there were definitely some noteworthy things that came out of it.

First and foremost, the fed chairman jay pal essentially said he would do anything within his power to keep the market from going down. Obviously he didn't say that verbatim he used more fancy terms like highly accommodative policies and unlimited quantitative easing and honestly, i don't blame him. He admitted himself that the economic outlook is highly uncertain because of the recent surge in coronavirus cases he's rightfully concerned about the economy in both the short and medium term. It's kind of scary to know that the second fiscal quarter, the one that ended on june 30th, will likely show the largest decline in economic activity in post-world war ii history.

I know all of that screams bearish sentiment, but on literally the exact same day, i saw a headline that stated: the s p 500 is having its best 100 day stretch in more than 80 years. So that brings up the logical question: what in the world is going on? How is this possible on one hand, you have things like half the labor force unemployed and a staggering amount of people unable to pay their rent, and on the other hand, you have a market, that's approaching all-time highs. This dichotomy should scream to you that the economy and the stock market are two different things. Yes, they are closely related, but the stock market puts a much stronger emphasis on the future.

For example, announcements, like pfizer's vaccine, shows promise helps with pushing the market to recent highs. I know it makes sense to be bearish because the economy has such a dismal outlook, but the stock market isn't always logical. Trust me. The fed's actions definitely create a fair amount of bullish sentiment.

I personally think the stock market will eventually fall, but your portfolio will thank you for understanding both the bold case and the bear case in the time being speaking of your portfolio. Let's take a look at how the market did today. This is the daily chart for the s p 500. As you can see today, we closed just above a previously established trend line.

I would definitely consider this to be bullish. Action that's in line with the seasonal bias of july. If the market can hold this trend line, i would be confident in it retesting the previous resistance of 3150, which would be a gain of 1.2 percent. On the other hand, if the market falls below this trendline, a failed bullish setup is definitely bearish and i wouldn't be surprised if we come down and test the previous support of three thousand.

This would be a decline of just under four percent. Let's take a look at how things appear on a smaller time frame. This is a one hour time frame that goes back to the start of june. Here we have a better idea of how the market closed, just above the trend line, because tomorrow july, 2nd is the day before a market holiday.

I'm expecting things to be quiet, but i'm personally watching for the market to re-test this trend line bounce off of it and return to this resistance. If you have a long position, i would definitely suggest taking some profits at this point. If we can break above that previous resistance on volume, the next area i would look to take profits at is 3190. from today's close.

That would be a gain of roughly 2.35. My final bullish target would be 3200, the all-time high, which would be a gain of 3.7 percent, keep in mind. This is all on the premise that we can break through this first resistance level. On the other hand, if the market is rejected at this resistance or if it collapses under this trend line, there's a good likelihood.

We return to 3 000, which would be a decline of roughly 3.7 percent. If you force me to pick between 3150 or 3000 in terms of what the market will see first, i do favor this particular scenario, but if we were to break below this trend line, i would switch my answer to three thousand. This particular situation will be strongly influenced by the two economic reports coming out at 8. 30 am eastern on july, 2nd both the unemployment rate and the jobs report will be released.

If these two reports are better than expected, i think there's a good chance of the market headed to 3150 and potentially filling this gap and going all the way up to 3190. If the reports are worse than expected, you can say hello to three thousand. However, you decide to trade, make sure you're looking for the best risk to reward setups if you have a different take on what's going on in the stock market. Let me know in the comments below i'm always happy to learn something new.

If you enjoyed this video, let me know by hitting the like button: if you enjoy this type of content subscribe to the channel and don't forget to turn on your notifications, thanks for watching and best of luck in the markets, you.