 Hey everyone, this is Dan with another episode of my weekly videos. Since the beginning of the year, S&P is down 14% and NASDAQ is down 23%. The market recovered for a few days after May 20th, but S&P and NASDAQ both dropped last Friday, closing the week slightly lower than the previous week. Will the market recover or will the market continue to go down? What are the major issues behind the market? In this video, we will look at those issues. We will also look at the charts for SPY, QQQ and a few ETFs that have been going up recently. Let's get into the details. First let's look at how the broad market has been trending. The candlestick chart is SPY representing the movement of S&P 500 and the blue line is QQQ representing the movement of the NASDAQ 100. As you can see, since the beginning of the year, SPY is down 14% and QQQ is down 23%. Definitely it's a very bearish picture. At this point, I'd like to suggest that you subscribe to my Twitter account in addition to subscribing to my YouTube channel. For example, on May 16th, I tweeted that I bought COPX, the Copper Minor ETF because the COVID lockdown in Shanghai and other cities in China will soon end. And then on June 3rd, about half a month later, I sold COPX at 8% gain. On June 2nd, I tweeted that I sold half of my TMV shares at 4% gain. TMV is the ETF paid to the 20-year Treasury yield. And then on May 27th, I sold 2 thirds of my UCO shares bought on May 19th at 9.5% gain. By way of my Twitter account, I share almost on a daily basis some of my trades as well as any news that are important to the stocks or ETFs that I've been tracking. If you like what you've seen so far, I'd like to suggest that you click the like, subscribe, and notification button that will enable you to receive notification when I post my next video. It will also encourage me to make more videos like this in the future. Thank you very much. Let's continue. What are the main issues behind the market nowadays? First of all, we have very high inflation rate running at 8.3% as of April. And that's the highest inflation rate in the last 40 years. And then because of the high inflation rate, the Federal Reserve banks will continue to increase interest rates and do quantitative tightening or reducing the Fed total assets. Since February, there's been a war going on in Ukraine. And also in China, Shanghai and a few other major cities have been locked down because of COVID. Because of the Ukraine war and China COVID lockdown, the supply chain issues that have been around for the last six months or a year have been getting worse, which also drives up the inflation. With regard to significant news in the last few days, we have on June 1st, the CEO of JPMorgan Chase, Mr. Jamie Dimon, said that there might be a hurricane coming over our economy. That's certainly a bearish prediction. And then on June 3rd, Microsoft lowered their earnings guidance because of the strong dollar. On the same day, Tesla announced that they would be laying off 10% of the staff. Let's look at where we stand with inflation. The inflation rate as reflected by the consumer price index was at 8.5% as of March. For April, it's 8.3%. The May inflation figure will be announced on June 10th, 2022. And I expect the number to be at least 8.1% to 8.3%. I'll explain why in the next slide. The US GDP price index was announced on May 26th, and it came in at 8.1%, which is about the same as the April figure. Historically, there's a pretty strong correlation between the GDP price index and the CPI. And therefore, I believe the May CPI will be as high as the April figure of 8.3% or maybe a little bit higher. And that will definitely continue to put pressure on the Fed to increase interest rates and to do quantitative tightening. Recently, the former Fed official, Mr. Bill Dudley, said the Fed might have to increase rate to as high as 6% in order to control inflation. In my May 22nd video, which you can find on my YouTube channel, I compared today's situation with the period between 1973 and 1976. That was when we had also 8% inflation rate and above. Back then, the Fed funds rate went up as high as 12.9% and currently were at 0.83%. The S&P went down actually 50% from its all-time high. Today, S&P went down only by about 13%. On May 22nd, it was down 18% yesterday since then it recovered a little bit. And then there's another time period when we also had more than 8% inflation rate. That was a period between 1978 and 1982. The Fed funds went up to 19.1% and S&P went down 27% from its all-time high. That's why I believe it's very possible within the next year that the market will be down 20-25% from its all-time high. We need to be prepared for that possibility. Where do we stand with the Fed funds rate? Currently, we're at 0.83%. And the Fed already announced that they will increase the Fed funds rate by another half percentage point in June and another half percentage point in July. And then by mid-2023, they expect to increase the Fed funds rate by another 1.25%. If you add up all these numbers, by the end of 2023, the Fed funds rate based on the current projection will be only at about 3.132%. Definitely, it'll be still too low compared to these two historical time periods when we have more than 8% inflation rate. That's why I believe the Fed funds rate eventually will be much higher than 3.233% before the Fed can bring the CPI down to the target of 2% to 3%. In the meanwhile, the Fed has also announced their plan to reduce the total assets. This chart shows the Fed total assets since 2021. As you can see, the Fed total assets has been going up at the rate of $120 billion per month. And that's the quantitative easing process, the QE. Now that the Fed wants to control inflation and reduce liquidity in the market, the total asset has been flattening and actually it's been decreasing in the last 2-3 weeks. According to the plan already announced by the Fed, it'll continue to go down. For example, for the month of June, July and August, the Fed assets will be decreasing at the rate of $47.5 billion per month. And after that, it will go down even faster. Starting September, it'll be going down at the rate of $95 billion per month. If you want to know more about the Fed total assets and QE and QT, you can refer to the video I posted on June 5th today on my YouTube channel. On May 31st, the European Union agreed on a partial ban of Russian oil imports to EU. When this program is implemented, this will reduce two-thirds of the oil import from Russia to EU. That will definitely continue to drive up the price for crude oil. In the meanwhile, the EU does not expect to be reducing the import of natural gas from Russia, mainly because they are already imposing the ban on oil and also because EU really doesn't have enough facilities to receive natural gas from other parts of the world because there's lack of facilities to decompress the liquefied natural gas that could potentially be shipped to Europe. And that's why reducing the oil import from Russia is much, much easier than reducing the natural gas import from Russia. This will have also implication as far as where the natural gas price will be in the next few months. We'll talk more about that later on when we look at the charts. The war in Ukraine has been driving up wheat prices recently because Russia and Ukraine are two of the world's biggest exporters of wheat. But in the meanwhile, as of June 2nd, it was reported that Russia is ready to guarantee safety of vessels carrying grain from Ukraine for humanitarian reasons. If this is implemented, that will certainly lower the price of wheat. After two months of lockdown due to COVID, Shanghai is now finally opening up. This will certainly ease the strain on the supply chain and also ease the pressure on inflation. Let's talk about a few ETFs that have been going up while the market has been going down. First of all, the ETF TMV, which is packed to the 20-year treasury rate, has been going up. We can look at the chart later. As well as the UCO, the oil ETF, and that's related to the Ukraine war. UGA, the gasoline ETF, also related to the Ukraine war. XLE, the energy ETF, that's related to Ukraine war as well. UNG, the natural gas ETF, also related to the Ukraine war. But I put three question marks behind that because it looks like the EU is not going to be putting any ban on the import of Russian natural gas anytime soon. And that's why UNG might actually go down in the near future. Weed, of course, also related to the Ukraine war. But again, I put three question marks behind that because if the humanitarian corridor is open to allow the export of wheat from Ukraine, it will certainly drive down the price of wheat. And then of course, while the market is going down, investing the inverse ETFs, SQQQ and SPXS, and by the way, these are triple inverse ETFs, very volatile and very aggressive. If you invest in these ETFs since the beginning of the year, certainly you have already realized quite a bit of a profit. As related to the China COVID reopening, the copper related ETFs, CPER and COPX, will be going up. And in fact, they have already gone up in the last couple of weeks. If you look at the chart for these ETFs, SPY is here. It's been down 14% QQQ. This line here, the blue line, it's been down 23%. All the ETFs that I picked have gone up since the beginning of the year, with UCO being up 134%, UNG, the gas ETF being up 126%, UGA up 92%, and so on. If you just look at the last month, the broad market as represented by SPY is here, down 0.79% and QQQ, right behind that, down around 3%. Then the best performer has been UGA, the gasoline ETF up 22% in the last month, UCO, the oil ETF up 20%, and then XLE, the energy ETF up 11%, then COPX, the copper miner ETF up about 6%, CPER, the copper ETF up about 5%. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe, and notification button. As usual, I very much welcome your comments, questions, and suggestions. Let's look at the charts. First of all, let's look at SPY. In the following chart, I will show definitely the line for SPY. I have also added a few more lines. The blue dash line is the 50-day exponential moving average. The yellow dash line is a 100-day EMA. The purple dash line is a 150-day EMA, and the red dash line is a 200 EMA. Also, I've drawn the Bollinger bands, as well as the RSI, DMI, and MACD indicators. For SPY, I'm showing three panels here. On the left is hourly chart. In the middle is the daily chart, and on the right is the weekly chart. And for each chart, I've shown the volume here. The RSI indicator, DMI indicator, and MACD indicator. The hourly RSI is fairly low. And then three weeks ago, we hit a very low point on the weekly RSI, and sure enough, the price bounced up a little bit. But then, as of last Friday, the price dropped again. If you look at the daily chart here, the bull run for the last few days seems to have been exhausted, and it seems to be dipping at this point. And then if you look at the news, in light of the Tesla layoff, and what Jamie Diamond said about this potential hurricane coming over the market, I would say at this point, the sentiment in the market is still substantially bearish. Also, we need to consider the fact that the Fed is not done with raising interest rates yet, and then also quantitative tightening is just starting to kick in. Therefore, I believe the market will continue to go down in the near future. Although while it is trending down, it will still ping-pong up and down, just like what happened in the last few months. If you look at the next level of support for SPY, it will receive support at 407 here. And then at the 20-day-simple-moving-average, the motor-bowling-year-band here at 402. And then the next level down will be 392 here, next level support. And then the next level support will be this bottom at 380. For resistance, the next level of resistance will be definitely this line, 417. And then at 419 upper-bowling-year-band. And then the next level of resistance will be at 429 right around here. And actually 424 right around here, which is the 50-day-exponential-moving-average. And this historical level will also be a strong resistance point. I have been using the SPY chart as well as the QQQ chart to guide my trading activities for TQQQ and SQQQ. Let's look at QQQ. For QQQ, similar to SPY, it's been bearish since the beginning of the year. And then it tried to recover a little bit since May 25th. But then as of last Friday, it dropped again, right after the Tesla layoff announcement. For support, I see the next level of support at 299, which is a 20-day-simple-moving-average. And then the next level of support will be 290 here. And then this bottom at 280, which is another level of support. For resistance, the next level of resistance will be at 315, the upper-bowling-year-band. And then 318 here. And then 325, which is the 50-day-exponential-moving-average. And then the next level will be at 329. Again, I've been using QQQ and SPY to guide my trading activities for TQQQ and SQQQ. And since the market has been bearish, I've been buying more SQQQ than TQQQ recently. Let's look at TMV, the ETI peg to the 20-year treasury yields. For TMV, it hit an all-time high of 112 on May 9th, since then it came down all the way through the middle of the bowling-year-band and almost scratched the lower bowling-year-band and then it started to recover. After struggling for three days, it finally got above the middle of the bowling-year-band. So it's critical for us to see in the next two days whether TMV will get support from the middle of the bowling-year-band. I still own some shares for TMV. I sold some shares earlier to Lock In My Profit, but I still own some shares. If TMV will be supported by the middle of the bowling-year-band, then I will buy more shares. The next level support will be 97 right here, and then the next level down will be 93, and then the next level support will be the lower bowling-year-band and 91. For resistance, the next level resistance will definitely be right here. That's 103, and then 106 here, and then 108, the upper bowling-year-band, and then of course the all-time high of 112 will be a strong resistance. Let's look at UCO, the three times oil ETF. For UCO, it is a little bit above the upper bowling-year-band as of last Friday, and it reached an all-time high of 52.17, and therefore to predict where it's going to be, we have to get into the Fibonacci extension territory. But first, let's look at support points. The next level support will be at 48 right here, and then the next level support down will be 45, the middle of the bowling-year-band, and then the next level down will be at 42, the 50-day exponential moving average, and then at 38, the lower bowling-year-band. For resistance, the next level resistance will be at Fibonacci 23% at $60.70, and the next level up will be Fibonacci 38% at 66. I recently sold my UCO shares, locking my profit. At this point, I believe it's too high for me to buy in. I will wait for UCI to come down a little bit in the next few days before I buy more shares. Long-term, I'm bullish on UCO, especially in light of EU's agreement now to reduce the import of Russian oil by as much as two-thirds. Let's look at UNG, the natural gas ETF. For UNG, it's being hovering a little bit above the middle of the bowling-year-band. And if you look at the weekly chart, the RSI value is very high, and that's why it's being pulling back a little bit. At this point, because of the EU's reluctance to reduce the import of Russian natural gas, I think the outward momentum of UNG will be limited. Although, since it's so close to the middle of the bowling-year-band, there might be a rebound in the next couple of days. But long-term, I will probably not be buying a lot of UNG shares unless the EU starts to ban the import of Russian natural gas. For the next level support, I see 30 to the next level support. And then the next level down will be 28, which is the middle of the bowling-year-band. And the next level down will be 26 here. And then the next level support will be here, 23. For resistance, the next level resistance will be at 31, which is also the upper bowling-year-band. And then the next level resistance will be at 32, the all-time high. Let's look at UGA, the gasoline ETF. For UGA, it's at all-time high. And the price closed Friday a little bit above the upper bowling-year-band. If you look at the hourly RSI and the daily RSI as well as the weekly RSI, they are very high. At this point, I will definitely not buy UGA yet, even though I'm bullish about UGA for the next few months. It's just that there's a short-term overboard situation. I will wait for the price to come down a little bit. And then when it starts rebounding, that's the time when I will buy some shares. For support levels, the next level support is going to be right here, 72. And then the next level down will be around 70, the middle of the bowling-year-band. And then the next level of support will be here, 62. And then the lower bowling-year-band at 61. For resistance, we will have to use the Fibonacci extension diagram. The next level of resistance will be at Fibonacci extension, 23 percent at 87 dollars. And then the next level up will be Fibonacci 38 percent at 92 dollars. Let's look at XLE, the energy ETF. For the energy ETF, as you can see on the weekly chart, the RSI value is very high. And if you look at the daily chart, the RSI value is also very high. At this point, I will not be buying shares of LXC until it starts to come down a little bit and then start rebounding. For the next level of support, I see this level at 86. And then after that, I see 84, middle of the bowling-year-band as the support level. And then after that, we'll be here, which is at 79. For resistance, definitely the all-time high of 90.4 will be a resistance level. And then beyond that, it will go into the Fibonacci extension territory. Then for the next level of resistance will be Fibonacci extension, 23 percent at 101. And the next level up will be Fibonacci extension, 38 percent at 107. Let's look at WEAT, the wheat ETF. For the wheat ETF, it's been trending down in the last couple of weeks, mainly because of the possibility of this humanitarian corridor being open to allow Ukraine to export wheat. It's now approaching the lower bowling-year-band. I still have some shares of WEAT. If it continues to go down the next few days, I will definitely sell. And I'm not inclined to be buying more shares in the near future. If you look at the daily RSI, it's pretty low, so maybe there's a short-term rebound and that's probably a good opportunity for me to just sell my shares and cut my losses. For support, SC support at 10.5, the lower bowling-year-band. After that, the next level of support will be at 9.7, this line, which also happens to be the 100-day EMA. And then the next level of support after that will be right here, around 9. And then the next level of support will be the 200-day EMA at 8.6. For resistance, I see the next level of resistance at right here, the 50-day EMA, 10.9. And then the next level up will be 11.4, the middle of bowling-year-band. And the next level of resistance will be here, 11.9. And the next level of resistance will be the upper bowling-year-band at 12.4. Let's look at COPX, the copper minor ETF. For COPX, the early RSI hit a very high point and it started to pull back. And that's when I sold my shares to lock in my profit. The daily RSI is still fairly high. And as you can see, it hit the upper bowling-year-band, then it pulled back a little bit. So it might drop for one or two more days before it picks up again. And if it starts to recover, then that's when I will buy in again. For support, I see the next level of support at 39 here. And then the next level of support below that will be at 38.5 here. And then at 37.5, middle of the bowling-year-band. And then, of course, this bottom of 34 will be a strong support level as well. But I don't think it's going to get down to that level anytime soon, because the market is very bullish for COPX in light of the reopening of Shanghai and other major cities in China. For resistance level, I see the next level of resistance, definitely at the upper bowling-year-band of 42. And then the next level of resistance will be here, 42.8. And then the next level up, 45.4. And then we can see another resistance level right here at 46.5. And then, of course, the 47.2 all-time high will be a very strong resistance. Let's look at CPER, the copper ETF. For CPER, similar to the COPX, the hourly RSI hit a very high value. Then it started to pull back. And on Friday, daily RSI is still fairly high. And if you look at the daily chart, it went way above the upper bowling-year-band. And not surprisingly, last Friday, it started to pull back. So CPER might still drop for two or three days before it starts to recover. Overall, I'm still very bullish about CPER for the next few days because of the reopening of Shanghai. For support levels, I see the next level support at this level here, definitely 26.4. And then the next level down will be the middle bowling-year-band at 25.8. And then we see another support level at around 25.5 here. And then, of course, the bottom of 24.5 will be another strong support level. For resistance, I see the next level of resistance right here at 38.5. And then the next resistance here at 28.7. And then here at 29. And then ultimately 30, the all-time high will be a strong resistance level. I'd like to remind you that I'm not a financial advisor. I share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to sell or buy stocks, you should make your own decisions and you should definitely consult with your financial advisors before you do so. This about wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.