It has now been exactly 10 months since we established 2410 as the measured objective for the S&P 500. In forming a potential double top this week at 2405.77 I’d say we are close enough to call the target in (as we did in February when the first top was made on what we called “peak Trump” day, post-congressional address).
Now, a target is not a stop sign; in this case it was a long-term objective based on a chart pattern, period. It could make me look like the genius I certainly am not, or it could just pause at the target on its way to further upside mania and a potential market blow off. Don’t let ’em baffle you with bullshit, nobody knows which of those, or whatever else may be in store.
For instance, this could just as easily be a bullish Ascending Triangle (sloppy though it is) as a bearish Double Top, which would not be activated unless SPX makes a lower low to the April low… period. Macro fundamentals and valuation are not technicals. On the subject of technicals, there is an ongoing bearish divergence by MACD and RSI, so that’s something at least for the bear case. But the trend is bullish until it no longer is and that applies to this daily view as well as longer-term views beyond the scope of this article.
There is no buying opportunity on US stock indexes in my opinion. Sure, there are nice whipsaws for day traders and the like, but I prefer individual stocks to buy on opportunity like previous bottoming setups in WMT, KO, KBH, etc., on which I’ve taken profits.
Now, these are replaced with new ones; like for example, SIMO, which pulled back to test the SMA 50 (#1 on the chart below) and was noted in NFTRH for its potential setup. It worked. Personally, I had taken a partial profit on the #1 shares but bought them back yesterday on the new pullback just above the SMA 50 (#2). This is a play on a pullback within an intermediate uptrend, which is often a good way to buy stocks.
As for Europe, let’s use the HEDJ (currency hedged) ETF since the the Euro STOXX 50 index data are not available in-day as this article is being written. I am interested in Europe as we revive a theme we had a few years ago as the ECB goes “me too!” with respect to the US Fed’s former QE operations. Again, Macro Tourist has been outlining the rationale very well on this cycle for those interested. See Stock Market Shakeout.
The chart of HEDJ got peppy on Macron and needed to be corrected. Turnabout being fair play, maybe a small break of the channel to test the SMA 50 might be in order. That would be a buying opportunity, assuming broad market stability, for Europe bulls.
Of course the global marketplace is much bigger than the US and Europe. We cover the whole enchilada in detail every week in NFTRH. But given the scope of this article, we need to move on.
………part two will be posted tomorrow………..