Weekend Feb 23, 2020
Here is an update on the % stocks over their 200 day MA
the actual SPX index went to a new high while the 200 day MA did not. This is a divergence and explains the pullback in the averages Friday.
A ten to twelve percent correction would put the SPX between teh 200 and 125 day MAs, that sounds about right.
Crude Oil
The pullbaack in stocks was joined by a pullback in the price of oil. Oil finished a big Wave One down from 65-50. A weak Wave Two has run its course by 54. Note the MAs are converging usually a sign of a trend change. Look for much lower prices ahead.
Ten Year Yields Fall
Our conclusions of lower stock and oil prices seem confirmed by lower still bond yields. buying bonds amid a big stock rally is surely a defensive move.
Social mood continues to trend negative. the two political parties could not be further apart. Within the Democrat party, there are fears of a McGovern type loss with Bernie at the head of the ticket. Interestingly Bernie is certain Barack will endorse his candidacy if he wins the nomination. We'll see.
Gold has rallied along with the dollar, another defensive measure, so brace for a stock retreat. If this gets more serious over the next few moths a Trump second term could be in jeopardy.
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