After yesterday’s retracement in the SPX, we saw a break and close below the 8-day moving average (MA). SPX still finds itself heavily OVERBOUGHT according to its 14-day RSI. Strong parallel channel developed since the lows in early October 2019. During last nights trading, the bottom support was tested but held up eventually. This support-line also corresponds with the 21-day MA, with a break and close below these levels most probably only finding support at the 50-day MA (3200). If I was currently running a long position (which I’m definitely NOT), this would also be my firm stop-loss as a break and close below 3200 only seeking technical support at the top of the Rising Wedge (at 3080). I firmly believe that a movement back into the wedge could most probably see us test the bottom support-line and 200-day MA at 3025, which remain my most important support level. I will re-evaluate a possible buy at these levels. I am however still worried about stretched valuations:
Country Shiller CAPE Ratio
Australia 22.09
Brazil 21.72
Canada 22.67
China 15.98
Europe 22.19
France 24.77
Germany 20.15
Hong Kong 17.38
Italy 22.22
India 23.34
Israel 14.29
Japan 21.69
Korea 13.03
Mexico 19.48
Netherlands 30.53
Poland 12.20
Russia 9.53
Singapore 16.13
South Africa 19.73
Spain 16.44
Sweden 22.77
Switzerland 29.52
Taiwan 23.65
Turkey 9.10
UK 18.34
USA 31.00
Average 20.00
Source: Barclays Research
Country Shiller CAPE Ratio
Australia 22.09
Brazil 21.72
Canada 22.67
China 15.98
Europe 22.19
France 24.77
Germany 20.15
Hong Kong 17.38
Italy 22.22
India 23.34
Israel 14.29
Japan 21.69
Korea 13.03
Mexico 19.48
Netherlands 30.53
Poland 12.20
Russia 9.53
Singapore 16.13
South Africa 19.73
Spain 16.44
Sweden 22.77
Switzerland 29.52
Taiwan 23.65
Turkey 9.10
UK 18.34
USA 31.00
Average 20.00
Source: Barclays Research
Trade active:
Watch break and close below 3200
Trade active:
Approaching my main support level at $3025. Will remain short for now.
Trade closed: target reached