Is A Blow-Off Top Setting Up

/ May 27, 2020 3:56 PM

Our research team has become increasingly concerned that the US Fed support for the markets has pushed price levels well above true valuation levels and that a risk of a downside price move is still rather high.  Recently, we published a research article highlighting our Adaptive Dynamic Learning (ADL) predictive modeling system results showing the US stock market was 12% to 15% overvalued based on our ADL results.  Today, Tuesday, May 26, the markets opened much higher which extends that true valuation gap. We understand that everyone expects the markets to go back to where they were before the COVID-19 virus event happened – and that is likely going to happen over time.  Our research team believes the disruption of the global economy over the past 70+ days will result in a very difficult Q2: 2020 and some very big downside numbers.  Globally, we believe the disruption to the consumer… more

Last week was a winner. The S&P 500 gained an impressive 3.2%, in fact, touching the highest highs it's seen since early March. The move was problematic though, for a couple of different reasons. Not only is the market now uniquely vulnerable to at least a little weakness (that could turn into much more weakness), the S&P 500's advance was... more

The marketwide rebound since the March 23rd low has been fairly indiscriminate. That's not to say every single sector, group, and region has rallied exactly the same. But, by and large, the rising tide has been lifting all boats to a similar degree. We're starting to see some divergence though… not just among sectors, but among market caps as well.... more

As technical traders and researchers, we’ve been paying very close attention to the GREEN ARC Fibonacci resistance level on the SPY as a key level for the US stock market and any hope of a continued upside price rally.  The SPY has traded near this level for the past three weeks and appears to be attempting a bit of an... more

– More aggressive Fed interventions will keep the stock market bottoms higher, and low interest rates and more innovation can boost the tops. – By Andrea Riquier, MarketWatch A new model for assessing stocks may include higher valuations, as the old paradigm is no longer valid, according to a research note from DataTrek Research on Tuesday. From about 1950 to... more

Continuing our research into the Real Estate market and our expectations over the next 6+ months or longer, we want to point out the disconnect between the current US stock market rally and the forward expectations related to the real economy.  Our researchers believe the current data from as well as forward expectations suggest a major shift related to... more

Continuing our multi-part article related to our belief the Real Estate sector is about become the next big segment to begin to collapse as a result of the COVID-19 virus event and the extended shutdowns taking place throughout the globe, we’ll continue to review the data and explore various options for skilled technical traders. In Part I, we shared some... more