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As shown on the daily chart below, a moving average “Death Cross” has formed on the World Market Index. It closed out Q2 2018 just above horizontal price support and below trendline support, as well as below both moving averages.
All three technical indicators are in negative territory, hinting of further weakness ahead, particularly if price drops and holds below 1950 on accelerating RSI, MACD and PMO declines.
Price action on the following monthly chart of China’s Shanghai Index has been under the bearish influence of a very long-term downtrending Andrew’s Pitchfork channel since it peaked in October 2007 and bottomed the following October.
After a weak attempt to break out above this channel at the end of January of this year, it retreated and is currently dropping early Tuesday morning following President Trump’s latest threats several hours ago to impose tariffs on an additional $200 billion worth of Chinese goods in connection with their recent trade war. It has broken below its near-term major support level of 3000 that I had identified in my posts of April 9 and February 16.
If this index returns to its channel “median,” it’s in for one heck of a plunge! Look for a break and hold below its last swing low at 2638.30 to continue its current downtrend on this monthly timeframe. It’s already in downdrend on the weekly and daily timeframes following its failed channel breakout attempt and the momentum indicator is firmly in downtrend on all three timeframes. (more…)
From the daily percentage comparison chart below of the four U.S. Major Indices, you can see that the Nasdaq 100 and Russell 2000 Indices have begun to surge above their recent all-time highs and have accelerated faster than their Dow 30 and S&P 500 counterparts.
The spread between the first two and the latter two indices is ever-widening and higher risk investing is on the rise…signalling that, either this latest surge is the beginning of a new bull market that would, ultimately, pull in the Dow and S&P and send them to record highs, as well, or is in the process of forming a climatic thrust before the end of a very long bull run that began when stocks plummeted to their lows on March 6, 2009, following the 2008/09 financial crisis.
With today’s drop in these markets (as of 12:40 pm ET), presumably in response to further tariffs imposed on China by President Trump, we’ll see how escalating world-wide trade wars, inflation, and Central Bank interest rate actions affect/infect U.S. (and world) markets in the coming weeks. (more…)
A NO-WIN FOREIGN POLICY
It’s clear that President Trump’s “America First” policy does not produce a “win-win” outcome for it and other world trading partners…at least, it has not been proven, yet.
So far, he’s only been successful in tearing up prior agreements related to the Trans Pacific Partnership, the Paris Climate Agreement, the Iran JCPOA, and has threatened to tear up the NAFTA with Canada and Mexico.
Although he is in current trade talks with China, he has not been successful in negotiating a new trade agreement with Canada and Mexico, nor has he been successful in negotiating any other bi-lateral or multi-lateral agreement that I’m aware of, including a peace agreement between Israel and the Palestinians.
In fact, he has exacerbated tensions in current NAFTA negotiations by slapping hefty and punitive steel and aluminum tariffs on these two closest trading allies, as well as on the European Union…under the guise of “national security” concerns. (more…)
In my last post on the S&P 500 Index (SPX), I mentioned 2750 as major resistance and 2680 as near-term support.
Since then, price has bounced around in between those levels, as shown on the daily chart below. At the moment, those two levels are confirmed by a variety of intersecting trendlines…most notably the two red horizontal lines (2748 and 2685), which are the nearest to these two levels.
Until we see a clean break and hold either above or below this red consolidation zone, the SPX will continue its sometimes extreme, volatile whipsaw action in a trendless manner.
It’s unclear whether momentum favours a breakout to the upside, inasmuch as the last swing high on the momentum indicator was lower than its previous swing high, in a divergence with the last two swing highs made by the price. However, this may have been intentional and meant to be used as a possible “bear trap” in preparation for the resumption of the rally that began in early April. (more…)
