Tag Archives: SP 500

S&P 500 Cash Index Cycle Location 09062019

All three indices jumped over 50-day moving average last Thursday.  The 50-day moving average has been resistance since the selloff began in late July.  Does this break out of the 50-day moving average mean that the market is out of woods?

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What to Expect from the Second Half 0f 2019?

The last trading week of August was equally painful for the bears and bulls.  The market closed the volatile month of August in a neutral position, which means the immediate trend in motion may see follow-through into September.  The pivot range (2985-3004) of the S&P 500 cash index  for the second half of 2019 is calculated from the high, low and close of the first ten trading days of July.  S&P 500 index 2985-3004 price level will serve as the resistance for the second half of 2019. 

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The Correction is Not Over

Last week, the bears tried really hard to knock it down to pass the first initial S&P 500 selloff low @ 2822.12.  S&P 500 and NASDAQ successfully defended the August 5th selloff low, but the DOW was not able to defend the first initial low and made a lower low on August 15th.

All three indices fell below last month’s low on the first trading day of August.  August started on a very weak note.  August has been the worst month for stocks for the last 10 years and September has been the worst month for the last 100 years.  So seasonally we are in the worst period of the entire year.

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Can Low Interest Rates Stimulate the Economy?

On the last day of July the Fed announced an interest rate cut by 25 basis points citing the reasons of “implications of global developments for the economic outlook as well as muted inflation pressures”.  Less than 24 hours later, President Trump announced 10% tariffs against Chinese imports of $300 billion.

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Decision Time

The Fed is about to cut rates for the first time since 2008 as the trade war is weighing on economic growth.  Are the rate cuts truly needed to support the economy or is the Fed under political pressure to appease the White House?  Last time, the Fed cut rates in 1998 to prevent a slowdown caused by the Asian currency crisis.  We all know what happened after the cuts.

This time is very similar to the 1998 rate cuts.  The economy is not weak and the rate cuts can only create asset bubbles like easy money always does.

Short term, it is over bought with extreme low volatility.  A summer selloff is still on the radar.  This selloff will create the last opportunity to get in the market before a grand bull market unfolds.

Long term, this market still has room to run. 

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