S&P 500 Is Toppy In Here, Looking For A Test To 1,898 Or More
$SPY, $VXX
The S&P 500’s 1% decline Monday is an indication of deeper dives ahead regardless if the Fed raises interest rates or not.
The S&P 500 has risen 0.08% since the end of Y 2014, putting it on track for the weakest performance since Y 2011. US The Fed has hinted that it will raise its target interest rate in December, the 1st hike since Y 2006, as the economy shows signs of healing from the Great Recession.
Stocks fell more than 10% in August from the May peak as China devalued its RMB Yuan, triggering investor fears that the world’s 2nd-biggest economy was in trouble. The market rebounded in October as central banks worldwide discussed larger stimulus plans.
The rebound off of the August lows makes stocks expensive compared with their earnings.
October was the best month for stocks in 4 years. And this drove the market’s P/E ratio above average. The current ratio for the Standard & Poor’s 500 stocks is over 22, the average P/E ratio for these stocks since the 1870’s is 16.6.
Higher interest rates will boost demand for the USD, making it more expensive than foreign currencies. That could/will hurt US exports, while corporate profits earned
The S&P 500 stock index fell below Key levels of 2,080 and 2,075 as Monday, opening up the possibility it may decline further to 1,967 to 1,898 or lower.
After the market broke out over 2047 several weeks ago, it fell back holding Key support and moved up again. Whether this will continue to and past the Key resistance at 2,122 is open, if that mark is broken, then it could drive further North. We wait to see…
Wednesday’s US major market indexes finished at: DJIA -55.99 at 17702.22, NAS Comp -16.22 at 5067.02, S&P 500 -6.72 at 2075.00
Volume: Veterans Day trade came in below average with about 800-M/shares changing hands on the NYSE.
- NAS Comp +7.0% YTD
- S&P 500 +0.8% YTD
- DJIA -0.7% YTD
- Russell 2000 -2.1% YTD
| HeffX-LTN Analysis for SPY: | Overall | Short | Intermediate | Long |
| Neutral (0.21) | Bullish (0.32) | Neutral (0.08) | Neutral (0.22) |
| HeffX-LTN Analysis for VXX: | Overall | Short | Intermediate | Long |
| Bearish (-0.29) | Neutral (-0.09) | Bearish (-0.35) | Bearish (-0.43) |
Stay tuned…
HeffX-LTN
Paul Ebeling
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