S&P and NASDAQ Moving Averages Weekly Deathcross

2019년 2월 9일

The chart is pretty simple,

• Dark blue lines: 200 weekly moving average
  
• Orange line: 50 week moving average
  
• Purple Line: 200 Daily moving average (programmed the CM_Ultimate to show a different timeframe)
  

The S&P 500 really seems to be in the drivers seat with the bounce initiated off the 200 weekly moving average and the NASDAQ responding by apparently bouncing in thin air way above its own 200w. Both are facing the 50W and 200D as resistance and put up what could be the beginning of a reversal candle pattern on the weekly timeframe.

SPX looks worse technically when it come to divergences, with both the RSI and MACD showing divergence that helped create our top in August and slip the price below the 50W and 200D moving averages with the NASDAQ only has divergence on the RSI. The RSI divergence is pretty bad though, as the NASDAQ RSI divergence has been developing since 2013 and the S&P had that breather around 2016.

The last time we were in a similar position was in 2008 at the red arrows right before the major collapse. And to be clear, when I say similar position I mean years of divergence building up until the price action on SPX slips to the 200W and is then pinned under both the 200D and 50W. As a 50w and 200W bearish cross become more likey and visible over the next six months things will start to get grizzly. The NASDAQ again looks healthier than SPX as the NASDAQ had yet to hit the 200W

Finally, as a longer view SPX and the NASDAQ going back to the mid 90s so we can look at areas of potential death crosses on the weekly.

• The blue boxes show where both SPX and the NASDAQ were in dire straits, with the price action sandwiched between the 200W and 50W pending collapse sfter a significant uptrend.
  
• The orange box is where the price actions, having previously breaking through the 200w as resistance, test it as support before taking off on the next major uptrend.
  
• The Red box shows where SPX was in danger as it had slipped to the 200W and if you look below you can see the NASDAQ riding on the 50W.
  [\list]
  In short, the only time in the last 15 years the market was in similar circumstances was in 2008, right before financial collapse. The next major confirmation of my suspicions I am looking for is the NASDAQ to slip the 200W as support and the final confirmation is the weekly deathcross of the 50 and 200 moving averages.
  
  And always, the Fed. The Fed didn’t do a rate hike its last opportunity and so I think they are going to watch the market move sideways and then and then raise interest rates to finally drain out the excess liquidity under the guise of hard medicine (never minding they are the ones that got us addicted to the liquidity in the first place). Even if they lower rates they don't have the room to lower them past zero and there is no guarantee that lenders are willing to lend and borrowers are willing to borrow.
  
  Inflation and Stagnation, Stagflation wasn’t named as a economic ill until the 1970s and broadly has too main causes: A massive inflation of the money supply combined other poor economic policies and then a Supply Shock. In the 1970s we came of the gold standard and then we had the oil crisis ’79. Now we have massively inflated the money supply since coming off the gold Standard and more specifically with Quantitative Easing. A trade & tariff war increases our risk of a supply shock, but of what asset would be involved in the shock isn’t clear currently. The time for some foreign power to attempt a supply shock is now or soon, but I am not sure who would dare under the current administration. Even without the last paragraph on the Fed and this paragraph on the trade war the chart shows death cross is at the closest point in over a decade and between that and the divergence expectations can create reality.
  en.wikipedia.org/wiki/Stagflation

2019년 2월 9일

노트

Didin't catch the fact the orange box wasn't in the chart when I took the image. Here you go