SP500: Downside Hypothesis; Tariffs Loom for Sunday
Before August everyone was in shock and awe, positively, when the SP broke all-time records, only to be equally as shocked in the opposite direction when we rolled over and eventually traded within a 115bps ROC in August as a whole.
Typically, the way a trend starts is the way it ends; that is, with a sharp rollover from ATHs, we will likely break this trend to the downside in a sharp way. The only way I foresee any sharp upside and re-test of ATHs is if there is a delay in the Tariffs on Sunday. However, with protests in Hong Kong, Trump doubling down and Trumps infatuation with keeping the trade-war going for further rate cuts, I lean heavily towards a downside hypothesis.
Moreover, the ROC within the trend-line is typically the first support once the trend-line breaks. The fact the Dow rejected values over 26400 on 4 difference occasions, and the SP got rejected at 2943 a few times and a few additional times at 2940 supports this idea further. Even further, the market was unable to hold onto future momentum from Thursday PM/Friday AM and finished flat.
September will likely be a month to forget for the bulls and could set-up to be destructive month to the downside that we have not seen in quite a while. With many PMI's due over the long-weekend, consumer sentiment dropping, the trade-war continuing, Hong Kong escalating, and economic data continuing to be flat or weak, the downside seems to be inevitable.
With the ECB meetings on September 12 and FOMO meetings on September 18/19, surely the market must go to the downside as a form of persuasion (particularly for the Fed), in order for any sort of cut to be warrant.
As I said 3 weeks ago, do not long this market until there is a strong close above 2945 in the S&P.
**Interesting enough this triple peak off the trend-line is very similar to last December. Will it repeat? Will find out on Tuesday.**
- zSplit
Typically, the way a trend starts is the way it ends; that is, with a sharp rollover from ATHs, we will likely break this trend to the downside in a sharp way. The only way I foresee any sharp upside and re-test of ATHs is if there is a delay in the Tariffs on Sunday. However, with protests in Hong Kong, Trump doubling down and Trumps infatuation with keeping the trade-war going for further rate cuts, I lean heavily towards a downside hypothesis.
Moreover, the ROC within the trend-line is typically the first support once the trend-line breaks. The fact the Dow rejected values over 26400 on 4 difference occasions, and the SP got rejected at 2943 a few times and a few additional times at 2940 supports this idea further. Even further, the market was unable to hold onto future momentum from Thursday PM/Friday AM and finished flat.
September will likely be a month to forget for the bulls and could set-up to be destructive month to the downside that we have not seen in quite a while. With many PMI's due over the long-weekend, consumer sentiment dropping, the trade-war continuing, Hong Kong escalating, and economic data continuing to be flat or weak, the downside seems to be inevitable.
With the ECB meetings on September 12 and FOMO meetings on September 18/19, surely the market must go to the downside as a form of persuasion (particularly for the Fed), in order for any sort of cut to be warrant.
As I said 3 weeks ago, do not long this market until there is a strong close above 2945 in the S&P.
**Interesting enough this triple peak off the trend-line is very similar to last December. Will it repeat? Will find out on Tuesday.**
- zSplit
Report: China launches WTO complaint against USA's recent tariff implementation