Monday Feb 24, 2020
The market closed near the low of the day. Announcing the sell off before the markets opened today a friend commented that I had been talking top of the market for two years. Fair enough let's take a look.
This is the last two years of the SPX. It hit 2600 in Sept of 2018. It then took till July of 2019 to surpass this level. Finally
Since this past Sept the index finally tacked on another 11% to complete a parabolic high. This kind of formation is called a distribution top, those who bought way back when are alternately buying and selling to the late comers.
Transports
The Transport average is much more economically sensitive. It peaked in Sept of 2018 and never saw that high since.
The Transports are a typically early warning sigh that something is amiss. Note th Transport average dropped 2750 points in three months after that high.
Russell 20000 Small Cap via Rydex
For some reason stock charts is not finding the Russell 2000 so I used rydex, same thing, no new high since Sept 2018.
Oh WTIC closed down 3.65% in line with major stock averages, i expect $50 support to give way soon.
There are numerous reasons for concern here.
Parabolic run up in major indexes at the end of a ten year run
No stock market rally has ever lasted more than ten years, we are ten months past the March 2019 ten year anniversary.
Breadth has narrowed with a concentration in the FANG stocks like the Nifty Fifty of the 1960s.
Tesla just traded at 183 price earnings ratio.
Total political polarization in the US.
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