They might have to kill DESTROY the economy to rid this inflation.
Fair value is SPX 3800 with rates this high.
Excuse my taking liberties in slightly changing your opinion.
And, yes, 3800 is currently the minimal downside price target…10 year yield to 4%.
Fib
Hey Dave, here you say 3800 is your minimal downside target, yet over in the market analysis area you said "What we do know at this time is that those index MCO's that have already made new lows for the year, their respective June price lows will also be taken out over the next couple of weeks with new downside price targets to as low as the COVID crash bottoms of 2020." Just trying to clear up what I am misunderstanding. Thanks
Thank you for the question...long time, no hear!! Hope you're doing well!
Between the two services at Technical Watch, the Weekly Breadth Updates are more for the intermediate term (4-8 weeks) to longer term (beyond 8 weeks) investor/trader...a potential roadmap or blueprint of what to expect over these same time periods. The Chat Sessions concentrate on the near term (1-2 days) to short term (1-6 weeks) expectations which are more aligned to traders, scalpers and day traders (the little squiggles and turns along the broader path of least resistance). So the 3800 level mentioned is only the minimal downside objective for this specific time frame (short term). The Weekly Breadth Data provides a larger "pullback" view of what we should expect for a potential turn in the current larger trend which, at this time, remains decisively lower (aside from all of the recent distractions (squiggles) seen along this same path).
Bottom line is...breadth of market leads price. Depending on the amplitude of this same money flow quotient in specific time periods, this will then give likely target price objectives to work with until proven otherwise.
One last question. The NYSI got up over 800 on this last rally. I also noticed SPX advance/decline line hit new highs. Is there any relevance to these occurrences. Thanks in advance. You've always been most gracious in your time and explanations.
Thank you for the kind remarks.
Besides the SPX, the OEX advance/decline line also hit new all time highs on this recent rebound from the June/July lows. However, the SPX and OEX volume U/D lines did not. Because volume is what is needed to move prices across the lake of liquidity, unless both cumulative breadth and volume move in tandem, you're not likely to see prices trend for more than a month or two (AKA a counter trend rally).
Also of high consideration is that we are currently working with bear market rules which have their own unique trademarks. In this case, having money moving primarily into value issues, without growth stock participation, highly suggests that much of what we saw in July and August was likely institutionally produced...the reasons of which may only be politically motivated in an election year after seeing the market losing at least 25% in value in the first 6 months of the year (PPT, anyone?). That said, the market was terribly "oversold" at the June/July lows, so it was going to take a bit of time to work off this imbalance. We also have to consider that a lot of the rally was likely currency related as the US Dollar continued to climb higher making anything denominated in this same currency more "valuable" to traders outside the United States. That said, I have no real proof of this idea, but it would explain how the U.S. markets were so buoyant over the summer months in spite of a Federal Reserve that continued to promote their current hawkish monetary policies.
In any event, if the internals were in better shape, and we had much more broader participation, the recent high Summation numbers would had told a different story altogether. Still could, actually. But instead of trending higher, we might just be stuck with prices moving net sideways going into the end of the year until we get better internal market synchronization.
Fib
Edited by fib_1618, 13 September 2022 - 11:44 PM.
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