S&P Pull Back

WorldEconomics Updated   
SP:SPX   S&P 500 Index
New update.

It seems like markets have found themselves face to face with reality. The bear market rally seems to have run out of steam due to the amounting economic and inflationary data. Simply put, I do not think markets can rally from here, based on:

  • RSI overbought on 1W
  • MACD Crossed on 1W
  • Food prices are at 18 moth highs according to UN.
  • Fuel prices are back near record highs
  • Rent prices are back at record highs according to Redfin and Zillow
  • Home Prices are heading higher according to Case Shiller Index
  • Vehicle prices remain high, making a slight gain last month according to FRED and MUI
  • Housing affordability is at a multi-decade low (1980s)

With this data in mind, I can't imagine how the Fed will be able to hide this new inflation in future CPI/PPI reports. It's impossible. Just because their official report says inflation is falling, it doesn't make it a reality. The debt to savings ratio in America is about the worst on record, which means people are paying more for the same items they used to buy because prices are rising and there is nothing they can do to stop it. Some people believe unicorns are real, but that doesn't mean they're real.

Markets have risen for the last 4 consecutive months without pause, and continually since Oct 2022 lows based on the idea that inflation is "easing" and that the Fed will reverse course. Higher interest rates are good, because it promotes savings with higher yields. It also promotes paying off debt and less leveraging by Americans. The problem with 0% interest is that it creates artificial spending growth, which in fact is nothing more than a bubble. We saw the mad rush to buy cars and homes in 2021 with people overpaying on over priced homes and cars. Now? They're starting to sweat, especially those who bought vehicles, because 2 years later, they still owe more than MSRP and dealers won't buy them for near MSRP. Home buying sentiment is the worst in 23 years according to CNBC (keep in mind, that's worse than 2008-09).

Keep watching.. let's see how this farce of a market plays out. Who knows, they may continue to fudge numbers and markets may reverse and rally again, but everyone knows that prices everywhere are higher, so it matters not if the "official" numbers are low. You feel it at the pump, grocery store, and everywhere else. There was no easing.

Trade active:
With the US10Y dropping, markets have moved up. Fully expect markets to rise in the short term with selling resuming in 2-weeks according to 1W indicators and 10YR rising wedge should push it back to 4.25% or higher bringing markets down. Keep watch
Weekly candle also bearish. Let's see. US10Y and crude prices are pushing equities down.
Trade active:
Nice drop today in S&P with bonds rising, crude rising.
Trade active
Hitting the target range
Key level broke. Hello 3900 and lower.
Trade closed: target reached:
Target Reached in late Oct

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