SPX reversal- if trade war doesn't end soon, 10 year bull will
All the rage is about how the economy is doing great, the best its ever done, they say. This trend line in the S&P 500 with relevant data for reference says otherwise.
Suspect SPX will see 3k again this month even though it normally rallies in December. Without major intervention in way of massive trade deals or taking measures that further reinforce we are in economic trouble, we don't have long before we break down and out of our 10 year bull run. Reversal could lead S&P as low as 500 based on emerging descending trend line (See light grey line).
Here is what we can easily see with this chart.
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**We have been hugging the bottom of channel of our 10 year trend all year and have 2 of 4 moving averages that have now fallen below the 10 year trend
-From 2009-2017 the majority of the trend was in the top of channel but the trend had already fallen to bottom half of channel not long before this administration took office.
-From 2017-current the market only barely breached out of the lower half of the channel around the time the $500Billion a year corporate tax break was announced
-In 2018 the USG provided a $500Billion a year corporate bailout in the form of a 50% corporate tax break but they didn't call it a bail out, also Amazon paid $0 taxes again
-End of 2018 and tariff trade rhetoric caused the market to crash hard below the 10 year trend line before recovering on dovish trade news that never came to fruition
-Mid-3rd quarter 2019 feds start cutting prime interest rates for the first time since the recession despite supposedly having the strongest economy ever, president pushes for negative interest rates, rates lowered 3 times in one quarter.
-Mid-3rd quarter 2019 feds start printing money with 3 rounds in one quarter to the tune of $250B, they dont call it Quantitative Easing (QE) as that breaks the narrative of a strong economy
-Each year under the current administration the national yearly deficit has ballooned and is now nearly as high as it was during the recession despite being in the best economic time we have ever had and collecting an additional $100B in tariffs from consumers. ($1T a year deficit).
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If the tariff war ended tomorrow, we could possibly rally to top of channel but given the new tariffs with the EU and South America, given legislation that congress is pushing against China for their muslim concentration camps and given the pressure the president is putting on bejing over hong kong, it is unlikely that the tariff war is ending any time soon. It is possible that the president will use the opportunity to allow China to continue to attack democracy in the streets of hong kong and grow their concentration camps without American intervention if China will concede on a favorable trade deal with America but it needs to happen real soon.
Also concerning is how this administration tells markets "a trade deal isn't happening" one day and the next day they say "it looks extremely promising" with corresponding market action. This has been happening ever since the trade war started and I suspect some people in the know are making a killing off of these dramatic economically impacting tweets which strongly parallel what one might call market manipulation. This is no different than Elon Musk lying about a buy-out to shake the shorts which resulted in him being ousted from his chairman position. It's highly illegal and only causes further uncertainty and volatility to the markets when influencers push false narratives for political or financial gain. Any trader should be scared to trade right now because one tweet will reverse the market without the underlying content ever actually having to materialize, regardless of fundamentals or trend lines.
In short, if the trade war doesn't end soon, this 10 year bull trend will.
Don't believe me, DYOR
Suspect SPX will see 3k again this month even though it normally rallies in December. Without major intervention in way of massive trade deals or taking measures that further reinforce we are in economic trouble, we don't have long before we break down and out of our 10 year bull run. Reversal could lead S&P as low as 500 based on emerging descending trend line (See light grey line).
Here is what we can easily see with this chart.
---------------------------------------------------------------
**We have been hugging the bottom of channel of our 10 year trend all year and have 2 of 4 moving averages that have now fallen below the 10 year trend
-From 2009-2017 the majority of the trend was in the top of channel but the trend had already fallen to bottom half of channel not long before this administration took office.
-From 2017-current the market only barely breached out of the lower half of the channel around the time the $500Billion a year corporate tax break was announced
-In 2018 the USG provided a $500Billion a year corporate bailout in the form of a 50% corporate tax break but they didn't call it a bail out, also Amazon paid $0 taxes again
-End of 2018 and tariff trade rhetoric caused the market to crash hard below the 10 year trend line before recovering on dovish trade news that never came to fruition
-Mid-3rd quarter 2019 feds start cutting prime interest rates for the first time since the recession despite supposedly having the strongest economy ever, president pushes for negative interest rates, rates lowered 3 times in one quarter.
-Mid-3rd quarter 2019 feds start printing money with 3 rounds in one quarter to the tune of $250B, they dont call it Quantitative Easing (QE) as that breaks the narrative of a strong economy
-Each year under the current administration the national yearly deficit has ballooned and is now nearly as high as it was during the recession despite being in the best economic time we have ever had and collecting an additional $100B in tariffs from consumers. ($1T a year deficit).
----------------------------------------
If the tariff war ended tomorrow, we could possibly rally to top of channel but given the new tariffs with the EU and South America, given legislation that congress is pushing against China for their muslim concentration camps and given the pressure the president is putting on bejing over hong kong, it is unlikely that the tariff war is ending any time soon. It is possible that the president will use the opportunity to allow China to continue to attack democracy in the streets of hong kong and grow their concentration camps without American intervention if China will concede on a favorable trade deal with America but it needs to happen real soon.
Also concerning is how this administration tells markets "a trade deal isn't happening" one day and the next day they say "it looks extremely promising" with corresponding market action. This has been happening ever since the trade war started and I suspect some people in the know are making a killing off of these dramatic economically impacting tweets which strongly parallel what one might call market manipulation. This is no different than Elon Musk lying about a buy-out to shake the shorts which resulted in him being ousted from his chairman position. It's highly illegal and only causes further uncertainty and volatility to the markets when influencers push false narratives for political or financial gain. Any trader should be scared to trade right now because one tweet will reverse the market without the underlying content ever actually having to materialize, regardless of fundamentals or trend lines.
In short, if the trade war doesn't end soon, this 10 year bull trend will.
Don't believe me, DYOR