SPX is now guilty until it can prove itself. After the Yuge Democratic win last Wednesday that fueled the massive rally last week, we have not given it completely back and then some. This is NOT the type of action you want to see with a steaming economy and near all time highs.
The S&P500 is now below the key 200 day MA and has BOUNCED BACK to the 40 day MA which usually will signal swing trend direction. In order prove it’s innocence the market will need to hold above a couple key important levels and take back the 200 day MA at 2762. Above the 200 day you have today’s open which is around 2774 and then I have my pivot at 2780 where I will enter back long. UNTIL THEN, this market is guilty.
The largest rallies come in downtrends folks. Turn off the TV and look at it from a price, volume, and volatility perspective. With AAPL, FB, and other high flyers rolling over this is going to be hard to hold up. You recently just saw NVDA get crushed after poor earnings and outlook and the Semi’s are starting to weaken. It is very clear what we are seeing.
The FED is once again behind the curve and are set to raise rates again in December (which is wrong, and in a growth slowing environment). This will prove to be an awful decision from a Federal Reserve and Policy standpoint and will likely be the main catalyst to cause the market to roll over from the highs. I am looking for Trump Turd to be completely right when talking about Rates and the FED will be forced to call them off in 2019 in order to save the market from a complete route like crash in the next 8-12 months. We are late cycle highs and this is nothing to be playing around with, every little policy move matters when trimming the balance sheet this much…