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I last wrote about China’s Shanghai Index (SSEC) on March 25, at which time I identified 3150 as major resistance. Price had closed at 3043.03 that day.
Since then, price briefly broke above 3150 to hit a high of 3288.45 on April 8, and, after retesting that level several times over the next few days, it finally broke and closed below on April 25. In Sunday’s overnight trading it closed today (Monday) at 2906.46.
I’ve not much to say, other than I think that U.S. equities and bonds will continue to outperform the rest of the world markets (especially since the Mueller investigation is now closed, as AG Barr emphatically stated in his testimony before the Senate Judiciary Committee this past week)…that the slow melt-up continues, punctuated, periodically, by episodes of consolidation and minor pullbacks…watch for a strong U.S. dollar to support this. And, I doubt very much if the Fed cuts rates any time soon, as President Trump has suggested…not with the strong economy firing on all cylinders.
Former Vice-President Joe Biden may run for President in the 2020 election. He stated recently that his platform would be the Obama/Biden policies of yesteryear.
Were he to be elected, and if the old Obama policies were resurrected, we could very well see the S&P 500 Index return to pre-Trump levels around the 2200 level, or lower, as shown on the monthly chart below.
In the two years since President Trump took office, the SPX has gained around the same number of points as it did in the last four years of Obama’s presidency. Those gains are in jeopardy, as uncertainty will weigh on markets in anticipation of a possible return to a more socialist agenda under Biden, or an even more far-left leaning Democrat.
Take a look at the following charts of the SPX:VIX ratio. Appearing in order,
each candle on the first chart represents a period of one year,
each candle on the next represents a period of one quarter,
each candle on the next represents a period of one month, and
each candle on the last represents a period of one day.
For the third day in a row, price closed on Tuesday above what I’ve called the 200 “New Bull Market” level since it first broke through during the first week in 2017. It still has a way to go before it runs into the 250-280 “Bull Froth Zone,” where we’ve seen traders/investors spike the price first, then take profits in the SPX since then, beginning in May 2017.