Category Archives: Uncategorized

A Rare Regime-Change Economic Policy Is Under Way

On last Thursday (10/08/20200) we sent out a private note stating that the small cap Russell 2000 index is breaking out in the midst of fiscal stimulus package negotiation.  This is the first time ever that the Russell 2000 index is outperforming the Dow and S&P 500 since the Russell 2000 index topped in August 2018.

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SP 500 Cash Index Cycle Location 02142020

What Coronavirus that virtually has shut down the entire second largest economy in the world?  It didn’t matter, the market has gone off the rails.  It seems that there is nothing right now to stop the rally.  The rest of the world is on life support, the US mega cap tech growth companies offer rare opportunities that provide growth and stability.

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The Market Correction is Underway

The market made a knee-jerk low on last Monday when the cronavirus hit the wire hard over the weekend.  It traded sideways for the next three days, then on Friday it took out the knee-jerk low and closed below it.  This is the confirmation of the weekly cycle correction is underway.

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Be Aware of a Blow Off Top

Last week all three indices had a mild selloff, which touched the previous breakout line but quickly closed above the breakout line.  Despite the scary new development about the pending trade war phase one deal, the price action has been resilient.  It’s impossible to predict what the December 15th White House tariff decision would be, but the price action predicts that the most likely outcome is no additional tariff to be put on December 15th, everyone will have a merry Christmas.

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S&P 500 Cash Index Cycle Location 07052019

We blogged last week that the market was in a confirmed bullish trend despite the trade war and Fed rate cut noises.  Last week was a holiday week so the trading volume was low.  As of now, the market is still in a confirmed uptrend.  Since the last quarter of 2018, the market has been entirely news driven regardless of the underlining fundamentals, but the cycles have been functioning as they were supposed to.  So it’s best for us to listen to the tape and ignore the noises.

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