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Stock Market vs Govt Bond Market. At the Dawn of ChangesIt's been 3 months or so since the late March quarter bullish exuberance took the stock market, Ethereum (ETHUSD), Bitcoin (BTCUSD), other crypto assets to their new 52-week and all-time highs. This is now changing, while the stock market and cryptocurrency markets have stopped making new highs, despite the fact that Roaring Kitty is once again deafening everyone with her phenomenal calls. Quite high inflation reports for the first quarter of 2024 became a kind of “cold shower” both for the market and for expectations of a possible reduction in interest rates, while the markets have been living this still unfulfilled dream for almost the last year and a half. The Federal Open Market Committee is unlikely to adjust rates at its upcoming next meeting on June 11-12. In any case, the prospect of any immediate rate adjustments is estimated at a modest 0.1 percent. It has been nearly a year since the FOMC last raised the federal funds rate to its current target range of 5.25% to 5.5% in July 2023. And while FOMC members have signaled that labor market weakness could force them to cut interest rates, the labor market remains broadly resilient and unemployment low. Fixed income markets are forecasting that September could be the first interest rate cut of the cycle. However, this is not certain as the estimated odds are currently around 50%. And again, these forecasts implied by the market can quickly adapt to economic news, and again - turn out to be unfulfilled dreams, just like the dreams of rate cuts that, as discussed above, markets have been living with for the last year and a half. The main technical chart is the ratio, between iShares Core S&P 500 ETF (IVV) that is similar to mostly known SPDR S&P 500 ETF TRUST (SPY) on the one hand, and Ishares 20+ Year Treasury Bond ETF (TLT) on the other hand. Both ETFs (IVV, TLT) were taken in "Total return" format. In technical terms, the graph indicates on Bullish upside channel, as right here we're near its upper line, exactly like 17 years ago in second quarter of 2007. Auxiliary RSI(14) chart indicates also that Stock/ Bond ratio is too overheated in favor to stocks. The idea should not be seen as a call for immediate action. However, it is wise to keep in mind that investing in stocks can seriously underperform Govt Bonds in the medium to long term.
AMEX:IVV
by Pandorra
This Statement is FalseCharting is amazing. The excitement it gives me is far greater than the satisfaction a good trade could ever give me. It is easy for me to state this fact since I don't trade. I consider the stock market as a super-long-term strategy. A strategy that lasts for generations, not a career. After all, the most wealthy have ancestors heavily invested in the stock market decades ago. Charting can be prone to showing ghosts when there are none. We tend to believe a crisis is coming, when in fact it is ending. No wonder the yield curve is super important. With specific adjustments to rates, the FED manages to accelerate and decelerate the economy. I recently found out about the following chart: SPX-equal-weight vs SPX-market-cap This chart represents "democracy" in wealth distribution between the 500 members of SPX. The higher the chart, the more spread out the wealth distribution. Now we are apparently reaching what appears to be a significant floor. There is a lot of ground to cover regarding this chart above. First things first, there appears to be a significant correlation between yield rates and wealth spread. There also appears to be a lag on this chart. First there is a wealth distribution change, and then the yield rates change appropriately. The charts above state that high yield rates go hand-in-hand with higher wealth distribution. At first this may seem counter-intuitive. How on earth do high yield rates help the markets? We all know that equities suffered last year because of the rapid rate hike. It is simple, really. High yield rates encourage banks to lend money. High yield rates help spread money from the few to the many. As a historical analogue we could compare the SPX/DJI chart. This chart is false. The many vs the few is not what you think it is. There is one caveat with this chart. SPX is a market-cap index while DJI is a stock-price index. With that in mind we should consider the following: -- The SPX/DJI chart is not 100% comparable. It may even represent the "average cost" of a stock. Since Market-Cap (money) is divided by Stock-Price (stock). -- In hindsight, we realize that the Great Depression happened in a period of ample and cheaper stocks, with market cap diminishing. It might have been the absolute definition of a bubble. Buyers bought progressively more and more stocks that came into existence out of thin air. Does this story ring any bells? Has anyone heard about derivatives? The RSP/IVV chart we talked before had an excellent behavior and correlation to yield rates. All was well, until now. Now we have an issue... The RSP/IVV ratio, which appears to lead yield rates is rapidly dropping. With that in mind, the FED should have lower yield rates into what the market prices them. Right now, the FED attempts killing the market. A conclusion is hard to make. Both the SPX/DJI charts, and the RSP/IVV-yield-rate chart suggest that yield rates are significantly overextended upwards. Have we leaped too fast too quick? Has the FED overreacted? Does wealth distribution suggest lower rates in the months to come? Has the market settled with a low-rate hyper-inflationary future? Will the RSP/IVV floor give-in? Is a roaring '20s-like bubble brewing? Just like our "friend" Musk called... Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
1
S&P looks to be losing 20 day SMA and will test 200 dayLooks like S&P is losing support of the 20 day SMA. You can see that it is currently clearly below the 20 day close SMA and now looks to below the 20 day low SMA. You can see in my chart that when this happens the indicator turns red and almost every time some level of pull back follows. How low is always the questions. It seems like the minimal pull back should be a test of the 200 day SMA (black line). This also corresponds to a test of the previous down channel (orange) and the major support trend line (blue). Note, that we seem to have a clear rejection of the red down channel. Will we retest this resistance after a pull back or will S&P continue lower? Close up Look at the 1 week timeframe.
OANDA:SPX500USD
by Dr_Roboto
3
S&P confirmed new down channel? Still Bear market?What I see is that the S&P has confirmed a new down channel (red) with Thursday's (2/2) peak after it broke out of the orange down channel made from the tops in March and August 2022. This new red channel is created with the two lows from June and October 2022 and the price action from May 21. If this holds, then bear market is still intact and price will fall. I would expect a test of the December lows and if not the October lows.
OANDA:SPX500USD
by Dr_Roboto
9
S&P trend lines to watch in the new yearAnother big picture view like my idea on the NASDAQ. Right now, it looks like on the monthly that the S&P has been testing the the purple trend line, but no success. From the looks of it, there is still a good size drop to come down to at least the bottom of the blue channel ($350) to test previous low, maybe even the center line of the purple channel around $325. Let's hope that holds, because if the dot com crash or the financial crisis repeat, then we could still fall all the way down to $240 range. Weekly with 20 and 200 SMA Daily with 20 and 200 SMA
AMEX:SPY
by Dr_Roboto
1
S&P trend is still downCrazy two weeks with some massive price swings. However, all said and done the down trend that started in January is still intact. Big test yesterday of resistance but ultimately failed with the gap up closed and no follow through after Fed rate hike. Looks like a good old pump and dump. The gray region (connects to gap up in 4/21) that I drew seems to be a very strong support and resistance zone, but again it could not hold it. Also failed to stay above the 200-day sma. Price looks to be making a double top with a slightly lower second top. If price closes below 20-day moving average band, then corrective wave is all but confirmed. Next question is, how low will it go.
AMEX:IVV
by Dr_Roboto
S&P test of 200 day and 2022 down channelYou can see that over the last two days that the S&P is jumped above the 200 day on Wednesday huge rally, which also broke above the April 2021 gap. However, today saw a rejection of the resistance of the down channel that started Jan 2022 ATH. This channel has rejected price solidly 2x times now. The most probable thing would be to see a rejection and to head lower, likely testing the 370 level. However, the market is fickle that way. Zag when you expect a Zig. Lot of talk about a Xmas rally. I think there is still some room to run up to the blue trend line, which is parallel to the other blue line connecting the major lows this year. That would be around 425 at the turn of the new year, but still a lower high. IMO, market feeling super irrational like most bear market rallies. Somehow everything is better now that the expectation is a 0.5 instead of 0.75 rate hike, and inflation is only 7% instead of 10%. All things that would be market killers any other year. The Fed still expects to raise rates to 5% or more, so still several hikes to go. And the expectation is the next round of earnings in the new year will be down. I have a hard time seeing a truly sustained rally back to the ATH or higher. I personally did some light buying in October and hoping for some profits for xmas. I am not super enthused to buy for what looks like a small, but risky gain. Day traders may be happy for the next few weeks, but longer term still feels pretty bearish to me.
AMEX:IVVLong
by Dr_Roboto
hiking can be exhausting It is my opinion that some form of a top is here. i have closed my calls..... even if we don't sell off and just go sideways; i don't think we will see higher all of dec. which means no santa rally this year. the bullish run should continue very early jan (jan 4 maybe) 2023. as an overview. i do think the bear market is over. i do think the bull market will continue well into next year, but nothing goes straight up and 20% move is a decent move. happy holidays to all.
AMEX:SPY
by Oppollo
2
S&P holding at support of down channelS&P 500 is currently finding support at the bottom of the down channel. It is also the 0.618 fib level. Today's price action is up and trying to bounce off the support line. I personally don't think this is the bottom, but this is an important place to watch. We could get a good rally off this trend line like back in the summer. However, the recent short rally was unimpressive and we could drop hard down to the next fib level and trend line.
AMEX:IVV
by Dr_Roboto
S&P 500 test of 20 day SMACurrent price action suggests test of 20 day SMA after finding support at the bottom of the channel and touch off the 200 week SMA (see my other posts on 200 week SMA). The new bullish counter rally is not really confirmed until it can hold above the 20 day and break the blue trend line. A bullish sign would be to break out, retest the 20 and the trend and then continue back up to the top of the channel. Rinse and repeat until the fed stops raising interest rates.
AMEX:IVV
by Dr_Roboto
S&P 500 Corrective Wave - Where will it stop?Looking at the current corrective wave structure, I think that we have another leg or maybe even two down before that market finds a bottom. In Elliott wave theory, wave C is based on the drop of wave A by aligning it to the top of wave B as shown in the chart. The market is currently testing the 0.618 fib level. This is also the bottom of the current down channel. This could be a good place for support, but I think we will see a counter rally next week and ultimately fall farther. The order of the stops are: 1) 0.786 -> 3500 2) 1.000 -> 3250 (likely) 3) 1.236 -> 3000 (my guess) 4) 1.500 -> 2800 (maybe) 5) 1.618 -> 2750 (worse case - ouch) I applied the same wave technique to the sub waves of wave A, and you can see that it initially stopped at the 0.618, then the 1.236 level, but ultimately bottomed out at the 1.5 fib level. Looking at the big picture, you can see that we have barely even started to fall as much as possible. The average on the 1 month cRSI is still in the overbought range and the big bear markets of the past pull the average all the way down until you see the indicator turn red.
TVC:SPX
by Dr_Roboto
1
S&P 500 to test $350 by Oct based on 200 week SMAHere is a look at the 20 and 200 WEEK moving average on the IVV ticker. Note how the S&P has reliably tested the 200 week MA during strong corrections over the last 12 years or so. Rarely does the price go much below. It also seems reasonable to me that we both get a retest of the June low and a more significant test of the Feb 2020 high. If we see this, then this is where I personally would start to get a lot more serious about going long. I am more of a "dollar cost averager" and have been moving some money into the market since May. I also think (given the current state of the economy) the $340-$360 price range should be a good place to build support (like 2015-2016 correction). Things are not looking as great from a liquidity standpoint with rates going up and the pull back on QE. Time will tell how much this will factor in. However, the job market is actually doing good, and people are still spending. Lets just hope that keeps up and we can avoid any kind of serious recession (2000 or 2008). A look at the 1 day with 20 and 200 day SMA
AMEX:IVV
by Dr_Roboto
S&P bounce off channel support - Will it hold?The S&P bounced off the channel support today. It also tested the 1.236 fib extension off the most recent peak. Both signs that a bounce was coming. There is also a gap that looks like it could be filled. In addition, this would be a good place for a test of the 20 day moving average by end of week if not early next week. Real question is will this hold or will we see another leg down. I would be more optimistic if we did not make a lower low yesterday.
AMEX:IVV
by Dr_Roboto
S&P 500 - How much lower could we go? Big Picture.A look at the big picture using 1M timeframe. In an attempt to remove the daily noise in price, you can see that even after a rough 2022 so far that we have barely scratched the surface of how bad it could get. The thing that I noticed is that the current price action looks very similar to April 2001 and March 2008. Looking at all 3 you can see both had a several month decline in price followed by a about one month of retest of the down channel's resistance. You can also see that all register a clear wave "A" on my cRSI indicator with the cRSI being in the oversold range. There are no other times where the cRSI sees an 1M oversold where the price did not continue lower. I have also added via arrows the approximate price loss from those 2 corrections plus the covid correction. Just my 2 cents.
AMEX:SPY
by Dr_Roboto
2
SPX - Long term uptrend line unlikely to hold.SPX - Long term uptrend line unlikely to hold. Even if prices where to be halted at the yellow uptrend line (SPX 1750), this still represents a further 55% fall in today's prices. 'Post crisis we will likely end the positive uptrend that began in the 1930s, and enter a period of zero or negative GDP growth furthermore' - to paraphrase Klaus Schwab (Founder/CEO of World Economic Forum). This is the end of abundance and fractional reserve banking and all the exponential growth the twentieth century has become accustom to.
TVC:SPXShort
by platinum_growth
2