BarroMetrics Views:S&P 2013-08-14
On the S&P’s, there is a great piece at: http://www.zerohedge.com/news/2013-08-13/guest-post-are-we-re-tracing-market-peak
As for me: I look at four main heads of information:
In each case, I see signs of a possible top, provided we see shaken the market’s false belief that the FED’s can keep the stock market afloat indefinitely.
- Figure 1 (price and volume) shows that the S&P has been trading a range, 1672 to 1710, since July 16. Yesterday’s price action suggests a move to the Primary Sell Zone is next on the cards. The key here the break to new highs has so far seen little follow-through. This is usually a bearish sign.
- My sentiment indicators are calling for top – we even saw, in the Sports section of the Financial Times, a piece on the creeping S&P bull – the Sports section for goodness sakes!
- Time wise, we have a seasonal high due early to mid September.
But all this is moot with the prevailing sentiment. In that regard, we are seeing possible cracks – the FED is speaking of tapering, there seems to be a push for Summers (in favour of QE ending) to be appointed Fed Chief; but my bet is still on some Black Swan event. Perhaps the Fed Budget debate which comes to a head in September?
So far, all has been quiet on that front. The Democrats and Republicans will need to get a move on if they are to resolve the issues without causing market ripples.
FIGURE 1 S&P Normalised Volume