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2018 was the year we saw the FAANGs form bearish shooting stars. Each candle on the following charts of FB, AMZN, AAPL, NFLX and GOOG represents a period of one year (absent on these charts is 2019’s candle, as I’ve left it off to illustrate last year’s weakness and volatility compared with prior years in these stocks).
You can see, at a glance, that FB is the weakest of the five, as it has erased almost all of its 2017 gains, as well as its gains last year.
The following charts depict 2018 market action in the S&P 500 Index (SPX), as well as the MSCI World Index. One word describes 2018 markets…volatile.
Volatility was extreme, as uncertainty gripped, not only U.S. markets, but markets world-wide, as well, as I had posited in my 2018 Market Forecast at the end of 2017. I believe it will continue to apply in 2019, and we’ll see a world market slowdown, as I described in my 2019 Market Forecast.
Note from Tim: I realize today’s an all-green day, but I wanted to share this post from SB in any event, since the big picture hasn’t changed.
Further to my post of December 17, the percentage of S&P Real Estate stocks above their 200-day moving average has dropped below 50% to 37.5% (as of Friday’s close), as shown on the following graphic. At 50% on that date, it was the “last man standing,” apart from Utilities.
The SPX gained 801.35 points from its November 8, 2016 close of 2139.56 (on the eve of the U.S. elections) to its all-time high of 2940.91 on September 21, 2018.
Since September 21, the SPX closed Monday (Christmas Eve) 589.81 points lower at 2351.10…a loss of 73.6% of those Nov/16 to Sept/18 points gained…and is now up by only 9.89% since November 8, 2016, as shown on the following percentage-gained graph.
Further to my post of August 6, the SPX continued to rally to top out in September about 100 points shy of an upside target of 3033, but exceeded its first target of 2900, as shown on the following updated monthly chart. The high was 2940.91 and I doubt we’ll see that matched before the end of December.
Since then, and as of Friday’s close, the SPX has plummeted and it came within eight points of reaching its first major support level of 2400, as I described in my post of December 17.
In last year’s market outlook for 2018, I anticipated a rise of around 10% for the SPX. At its all-time high set on September 21, the SPX had risen by 9.62%, before it began to lose its gains for the year, and more.
At the time of today’s analysis and post (December 17), you will see from the first percentages gained/lost graph that 7 of the 9 Major U.S. Indices are in negative territory year-to-date.
Further to my post of December 2, it’s evident from the following daily charts of the four U.S. E-mini Futures Indices that they all broke and closed below both their “chaos zone” (the trio of future-offset 5, 8 & 13 MAs) and their 50 & 200 MAs, respectively, last week…a failure to hold above those major support levels.
Price on the SPX is currently hovering above 2600, as shown on the following monthly chart.
As I’m writing this on Sunday around 7:30 pm ET, the four U.S. E-mini Futures indices have gapped up and are currently trading above a “chaos zone” of a trio of future-offset 5, 8 & 13 moving averages (green, red & blue), as shown on the following daily charts of the YM, ES, NQ and RTY.
Both the YM and ES are above the 50 MA (pink) and 200 MA (yellow). Both the NQ and RTY are trading under the bearish influence of a moving average Death Cross formation. The NQ is slightly above its 50 MA, but slightly below the 200 MA, whereas the RTY is below both of those.
On a short-term basis, I’ll be looking for price on all four E-minis to hold above, firstly the moving average trio and, secondly, their 50 MA to maintain a bullish bias, whereby we may, potentially, see them retest their highs of this year or even set new records before year end (the RTY will have to first break above its 50 MA).
Just a few words describe U.S. market action, so far, this year, as depicted on the following monthly, weekly and daily charts of the SPX (N.B. the ‘input value’ for both the momentum and rate-of-change indicators is shown as ‘one’ and in histogram format to emphasize the following)…
increased expansion/contraction (fluctuation) of volatility (compared with 2016 and 2017)
lack of convincing directional follow-through on a weekly and daily basis
in other words, profits have been taken, but there is a hesitation to commit to a larger-scale sell-off
While the the weekly and monthly uptrends have not yet been broken, the weekly action has been lacklustre/non-committal, and the daily uptrend has been badly damaged. (more…)