S&P: Exhausted. Overbought. Sleepy. Tired. What Now?
With the geopolitical issues that clouded over the markets back in May and somewhat in August equalizing, the markets ultimately broke out of the August trendline.
Where we go from here mostly depends on the rate cuts or lack there of from Powell next week, and the trade talks between USA/China in October.
As I clearly depicted on the chart, I believe scenario #3 is most likely: no major trade breakthroughs and a 25bps cut from Powell leading to about a 3095-3118 top. I still do not expect a trade "deal" until a few months before the general election as Trump wants to pump "no trade deal" for further rate cuts and use a trade deal as leverage when he goes against the future Democratic nominee.
If scenario 1, 2 or 3 plays-out I am targeting at-least a 15-20% correction in November into early December before an eventual re-test to the August trend-line, then an eventual bear market sometime late in 2020. Unlike others expecting a recession very soon, I do not expect one to start until mid 2020 but more-so through late 2020. Should scenario 4 play-out, however, the correction would occur immediately.
The correction that is likely to come (in my opinion in November to early December) would likely be off-the-backs of no trade deal with China, poor final quarterly earnings, no October rate cut, slowly deteriorating economic data, and the market being incredibly overbought.
- zSplit
Where we go from here mostly depends on the rate cuts or lack there of from Powell next week, and the trade talks between USA/China in October.
As I clearly depicted on the chart, I believe scenario #3 is most likely: no major trade breakthroughs and a 25bps cut from Powell leading to about a 3095-3118 top. I still do not expect a trade "deal" until a few months before the general election as Trump wants to pump "no trade deal" for further rate cuts and use a trade deal as leverage when he goes against the future Democratic nominee.
If scenario 1, 2 or 3 plays-out I am targeting at-least a 15-20% correction in November into early December before an eventual re-test to the August trend-line, then an eventual bear market sometime late in 2020. Unlike others expecting a recession very soon, I do not expect one to start until mid 2020 but more-so through late 2020. Should scenario 4 play-out, however, the correction would occur immediately.
The correction that is likely to come (in my opinion in November to early December) would likely be off-the-backs of no trade deal with China, poor final quarterly earnings, no October rate cut, slowly deteriorating economic data, and the market being incredibly overbought.
- zSplit