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Further to my post of June 8th, here’s what has happened, since then, on China’s Shanghai Index.
After making a slightly higher high of 5178.19 on June 11th, it has since plunged to a low today (July 8th) of 3421.53 to close at 3507.19…slightly above its 200 Day Moving Average — making a loss of 1671 points from high to close, thus far.
The first level of major supports sits around 3000…the next around 2500…a solid break and hold below 2000 could cause major panic in markets around the world.
So far, attempts by the Chinese Central Bank to intervene and stop this falling knife have failed…we’ll see if this market can find any stability at any of the above-noted levels. There are no “buy” signals at this time on the RSI, MACD, and Stochastics indicators — rather, they are still bearish, although quite oversold; however, the extreme bearish force of the MACD, in particular, should be respected, as we could, very well, see much more selling in the short term.
Going into 2016, the data points to a 9-11% increase in healthcare costs. Let’s not get bogged down into who will bear this cost, let’s just agree it will not be good for Employers, consumers, and State Budgets.
The GDP of the U.S. is approximately $17 trillion. Healthcare is 17% or approx $3 Trillion. This increase transfers $200 billion additional dollars out of consumers (as a tax, or employers as a cost, or States as an expenditure).
This is on top of an expected flat to 2% revenue growth expected next year. Consumers will stop spending on other things or take the tax and drop out, employers must grow $10 dollars of revenue for every dollar of the increase they will absorb, to simply keep EPS the same. At 8% of GDP for Employer portion of Health costs, that is $100 billion in new revenue. That is nearly a 6% growth in Revenue just to run in place.
I have shamelessly taken over a big table and have made myself a very comfortable workstation (and a standing one, no less; you know how I hate to sit). Since our room isn’t ready, I’m just going to chart and trade anyway.
Also, thank you all for your kindly 25th anniversary wishes. Some of you can imagine what a ceaseless delight it must be to live with someone like me for a quarter-century, so bless my wife for still putting up with me. Many years ago, when I’d overhear people ask “What’s she doing with him?” I knew I had successfully married up.
For me yesterday was possibly the most fun day of the year so far, and had the low of the day just continued down another three ticks on ES to test the globex low at the open on Sunday, would have come close to perfection, as I had a buy order there. It seems fairly obvious, Greece headlines permitting, that SPX is going with my preferred option that I laid out before the open yesterday and both the daily RSI 5 buy signal, and the strengthened 60min buy signal, that I was talking about as possibilities in that post had fixed by the close yesterday.