victorko

S&P500 TOP - BROADENING FORMATION - OVERVALUED

Short
FX:SPX500   S&P 500 Index
The S&P500 is clearly topping out at 3015 in a broadening formation. This index is overvalued using DCF valuation (5% growth, 8.6% discount rate) by 15%. Expect a fall down to 2500. The Nasdaq 100 is also topping out and the Russell 2000 never confirmed the highs in these indices. Look at the RSI , ROC and MACD . All have topped out and are turning lower. I am expecting Trump to make more tweets about putting tariffs on European car imports and other tariffs in addition to China. Compared to 2000 and 2007, this market's P/E ratio is high when considering how low inflation , interest rates and the earnings growth rates are. Stocks to short which have absurdly high P/Es include TSLA , SQ , GDDY , UBER. You could short AAPL too on a trade war escalation. Just a footnote, Netflix has dropped 12% overnight on decrease in growth of subscribers. Is this a sign of things to come shortly?

Second footnote: Broadening formations were seen in some stocks in 1929. Is this a harbinger for today?

Comments


Yep, although I am a bit concerned that D is so asymmetrically subdivided.
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