• Entertainment
  • Finance
  • Marketing
  • Real Estate
  • Technology
  • Social
National Journal Community Of e-Experts
Finance

The Short-Term Trend Ahead

By Kurt Osterberg · On October 20, 2018

I doubt we’ll get much of a short-term rally until after the midterms, and then I expect some market strength through to the end of the year. The only problem with this view? Everybody else thinks the same thing.

Here is a terrific quote from today’s column by Mike Burk.

Last week began with a sharp rally. Sudden sharp rallies in bear markets are the complement to the sudden sharp declines seen in bull markets.

The Long-Term Outlook

Are we near a bull market top? I don’t know, but I do think there is a good chance that we are near the end of this bull market. I think we all recognize that if the market is topping, it will take awhile for the process to play out.

I don’t have the time to put together a convincing presentation, so I am just going to show many of the charts I like to review, and in no particular order.

One of the early indications that there was a problem brewing in the market was the poor performance of the regional banks. Now they are showing a solid head-and-shoulders top.

This is really good evidence of medium or intermediate-term weakness, but is the pattern enough to fit into making a case for a bull market top? I’d say no.

Here is a 12-Year monthly view of the same index. From the looks of this the longer-term uptrend remains intact.

Here is the head-and-shoulders breakdown of the Semiconductors. These stocks have been this bull market’s leaders, so I think a loss of this leadership is critical. I just don’t see another group taking their place. But is this chart pattern big enough to indicate a bull market top?

Here is the 12-Year monthly of the Semiconductor Index, and it really has plenty of room to maneuver before breaking down. What to think?

Below is the ECRI Economic Index, the Small Caps, and the rate-of-change for M2 growth. All three panels are now looking weak.

The ECRI Index is key. A break down below the zero-level isn’t the end of the world, but it is a sure sign of significant weakness. If there is a breakdown below the -5% level, then I will be completely out of stocks and I am assuming a recession will be starting.

The small caps have broken below their uptrend line which is something that didn’t happen during the ECRI weakness shown in October 2017. The strength in small caps was a hint that the ECRI would turn and head higher. The opposite is occurring now.

M2 growth has been consistently weak for two years, and although it has stopped its decline, it hasn’t shown strength either.

I’d say that if you combine the three panels then you have a situation that does not favor higher stock prices. However, it still isn’t enough to say that the bull market has topped out.
 

Print Friendly, PDF & Email

Share Tweet

Kurt Osterberg

You Might Also Like

  • Finance

    How To Earn A 10% Yield On Cost From PepsiCo Dividends

  • Finance

    Extreme Cold Weather Forecast Puts Natural Gas ETFs In Focus

  • Finance

    How To Trade Options

Top Finance

  • Dollar General (DG) Q2 Earnings And Revenues Surpass Estimates Dollar General (DG) Q2 Earnings And Revenues Surpass Estimates
  • Samsung Galaxy Note 9 Review Samsung Galaxy Note 9 Review
  • USD/CAD Forecast October 22-26 – Will The Canadian Dollar Rise On The Rate Hike USD/CAD Forecast October 22-26 – Will The Canadian Dollar Rise On The Rate Hike
  • Extreme Cold Weather Forecast Puts Natural Gas ETFs In Focus Extreme Cold Weather Forecast Puts Natural Gas ETFs In Focus
  • Chart: Amazon’s Dominance In Ecommerce Chart: Amazon’s Dominance In Ecommerce

New Posts

  • How To Earn A 10% Yield On Cost From PepsiCo Dividends

    How To Earn A 10% Yield On Cost From PepsiCo Dividends

    October 21, 2018
  • Extreme Cold Weather Forecast Puts Natural Gas ETFs In Focus

    Extreme Cold Weather Forecast Puts Natural Gas ETFs In Focus

    October 21, 2018
  • How To Trade Options

    How To Trade Options

    October 21, 2018
  • Adding To Merkel’s Woes: SPD’s Collapse In Germany, Greens The New Left Darlings

    Adding To Merkel’s Woes: SPD’s Collapse In Germany, Greens The New Left Darlings

    October 20, 2018
  • Self Sufficiency Over Adversity

    Self Sufficiency Over Adversity

    October 20, 2018
  • About
  • Contact Us
  • Privacy & Policy
  • Sitemap
  • Terms of use

Copyright © 2018 NJCEE. All Rights Reserved.