S&P 2014-08-18

BarroMetrics Views: S&P 2014-08-18

Back from hols and ‘honeymoon’. I had a great time and it’s good to again climb aboard the saddle.

While on hols, the S&P had a pull back that had many calling for the correction that ‘has to happen’.  Let’s see…….

Figure 1 shows the break and subsequently rally. The S&P is retesting the breakdown on a 5-day swing basis (weekly trend). The question that arises is whether we shall see a resumption of the downmove or see, at least, a test of the Primary Sell Zone of the range 1992 to 1904. I’d suggest the latter is more likely. The reason?

Figure 2 shows why.

You’ll see that the FED AMB graph has again moved up. With the sentiment strongly reflecting that the FED will come in to bail out the stock market, I believe it unlikely that we’ll see any meaningful decline until the AMB shows  a decline of around US$200B.

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FIGURE 1  S&P Daily

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FIGURE FRED AMB

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