Triple Peaks For Stocks?
Market conditions seem to have turned on a dime. Just 6 trading days ago, several major indexes were grinding to new highs and threatening to go much higher. Then came the flare-up in Trade tensions with China and suddenly the health of the markets took a nasty turn for the worse. “Trade Tensions Topple Markets”.
While the S & P 500 and Nasdaq 100 made very slightly higher highs, the Dow Industrials looked nearly certain to follow suit. It didn’t.
What precisely is critical, however, may be to arrange the info and also to provide it into a manner that buttresses the chief issue of your article at https://www.affordable-papers.net/. With only a tweak occasionally, it may possibly be regarded an excellent composition, you think. The five- sentence theme is a terrific method of studying just the way to create an academic essay. Stick to that important theme through the essay.
In a argument essay you’d have to furnish evidence without supplying too large some dilemma. In each instance, the 1st word attracts the audience in to uncover how the fascinating reality produces a purpose. Get somebody else to study the article and to try to take out the primary points. To accentuate the stream of your own essay make certain the preceding sentence of a single section hyperlinks to first sentence of the following paragraph.
Up until 8 days ago, expectations were that a highly mutually beneficial trade deal with China was practically imminent. Or, at least, those were the proclamations of the Administration and its various advisers. Then on Sunday, May 5th, everything seemed to change. Instead of finalizing a comprehensive deal on May 9th, as had been telegraphed for months, President Trump tweeted his intention to RAISE tariffs on ALL Chinese imports from 10% to 25%, barring a deal.
The shocking change in prospects was blamed on China’s reneging on key aspects of the deal, especially in the handling of sensitive technology and intellectual property.
It’s NEVER the news that matters. It’s THE MARKETS REACTION to the news that matters. Last week’s reaction, it appears, has changed everything.
The chart above is a 5-year look at the Dow Industrials. The long term is potentially quite ominous. The price chart appears to show a VERY BEARISH TRIPLE TOP formation. If the Dow cannot hold support and rally to new highs PRETTY SOON, the odds for a continuation of this Bull Market become quite poor. The odds for a REAL BEAR MARKET become much better.
S & P 500 and Nasdaq 100 Make Reverse Wave Highs?
Pictured above are the 5-year charts of both the S & P 500 and Nasdaq 100. They differ from that of the Dow, but are no less ominous. Each appears to be completing a 5-Point “REVERSE WAVE” pattern or Megaphone. This pattern is fairly uncommon but when it occurs at the end of a long trend, a REVERSAL in that trend is likely.
A REVERSE WAVE indicates the existence of tremendous crosscurrents as one trend is VIOLENTLY REVERSED, without one shred of warning. The Trade Tensions with China may be as much an EXCUSE for a market change of direction as a reason. As we’ve said on many occasions, a severe pullback was likely at any time – especially after such a torrid advance.
Is The Bull Market of 2019 Over?
Way, WAY too early to tell. Keep in mind that the Federal Reserve remains “Behind” the S & P 500 and is very likely to take supportive action if the stock market declines much further.
The possibility of accommodative Fed action has been made even MORE likely by falling interest rates. The Five Year Treasury, pictured on the left, closed at 2.18% which is BELOW the Federal Funds rate.
The Treasury curve has AGAIN become uncomfortably inverted. The 6 month bill at 2.43% is now HIGHER than the 10 year Bond at 2.40%. Inverted yield curves, those in which short term rates EXCEED longer term rates, are not NORMAL. They uncannily predict recessions with a lag that varies typically between 6 and 18 months.
Ominous Short Term Breakdowns. Double Tops.
In similar fashion to the worsening longer term pictures as illustrated above, the near term looks very poor. The slide show below illustrates the key market indexes and there near term prospects. The key takeaways from the Slider are as follows:
- The Dow, S & P 500, and Nasdaq 100 have all formed “Double Tops”. The Dow came up a bit short of the late summer peak, while the NDX and SPX both made very slight new highs before being turned back.
- All 4 Indexes have broken down from ASCENDING WEDGES to turn ALL of them NEUTRAL.
- The major equity indexes closed only slightly above “Next Support” today. They should find enough support to bounce higher. If they trade through them on the downside, all of the patterns will turn BEARISH.
A Great Time To Be in Cash
The odds are rising that the Bull Market of 2019 and, in fact, the last DECADE, might just have ended. It’s MUCH too early to tell.
In this environment, it important to reduce risk AS MUCH AS POSSIBLE, AS SOON AS POSSIBLE. The increase in volatility over the last few days ENSURES that opportunities will be plentiful, perhaps though on the downside. Gold, for example, is MORE than overdue. We’ll keep you posted.
Be Informed, Not Misled!