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The Dow 30 (YM), S&P 500 (ES), Nasdaq 100 (NQ) and Russell (RTY) E-mini Futures Indices are in danger of being swallowed into their respective moving average “Alligator” formations (where the moving averages are offset into the future), as shown on the following daily charts.
If price is engulfed within and falls below these formations, we’ll see high volatility and wild swings ensue, with a possible correction in equities.
My last post was not overly enthusiastic about a continued rally in the SPX, as evidenced by its title.
Now that the month of May is complete, you can see from the monthly chart below that a large triple top has formed on the SPX, which is, in fact, thanks to three bearish candle formations on this timeframe (namely, a dark cloud cover, followed by two bearish engulfing candles) — albeit it on successively higher swing highs — after overshooting its upper edge of a long-term ascending regression channel and reaching its +3 standard deviation level.
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.