The US Market (S&P500 Index) has made new highs once again. The fact that we exceeded the 2018 high in 2019 raised the possibility of an economic cycle inversion increasing the risk of a correction next year. We are NOT breaking out from the standpoint of a sustainably long-term rally.
The liquidity crisis throughout Europe and the East has been sending more and more capital into equities fleeing the bond markets. The risk remains that the market could rally into the next turning point in January. However, the fact that this rally we saw the S&P500 and the NASDAQ take the lead up from the Dow. This unusual move has historically proven to be a warning sign that we may be approaching a temporary high with a correction thereafter.
We remain optimistic that the slingshot move will come on schedule when the alignment forces an exodus of capital from Europe and China. Until then, as you watch the Daily red sell signals appear and move to the Weekly charts, consider this a likely top. Although temporary, it could be significant. The weekly chart clearly illustrates that we are pushing the top of 2 bullish trend channels; the first is a 4-year channel starting in 2016 and the second starting in 2018. Importantly, the Fed commenced QE again because the topping process has frightened the “Commitment of Traders” smart money. The smart money is now significantly bearish.
Pay attention and stay close to your private area signals to exit and preserve your account value as a pullback may appear shortly.