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Monday, November 9, 2015

Daily update 11/9 Global economy

The market delivered the expected thrust day. 

SPX was down enough to change the color of the price bar to red.  However, it is still above a sharply rising 20 SMA.  Breadth was -78% so the selling was broad based.  New highs dropped all the way down to 28.  New highs increased somewhat to 84.  The 20 SMA and the 200 SMA have come together around 2063.  That is likely to be a support area. 

The futures got a confirmed break of the 18 SMA today for the first time since this rally began in early Oct.  That gives the bears the edge for the moment.

The green/red bar count chart got a negative crossover.  Remember the breadth indicators got a negative cross on Friday.  Market internals are in agreement for the bears now.

This is a bit of an interesting situation.  Market internals are negative.  The longer term MAs (50,100, and 200) are all negatively positioned.  However, the 20 SMA is above the 50 and SPX is still above the 200.  While the negatives would seem to outweigh the positives in the long run, over the next several days the bulls might put up a fight.  It seems logical to have a battle around that key 200. 
Unless the dollar fails its break out I expect the bears will win in the end.  My perception of the key fundamentals are negative.  Revenue is contracting and the global economy is slowing.  We are on recession watch here in the U.S.  If that is not bad enough the FED may actually raise rates.  It seems like a difficult setup for knowledgeable investors to put money to work.  It makes much more sense to me to raise cash levels.

Here is the latest global recession probabilities chart.

The chart says above 70 and there is an 86% chance of a global recession.  The latest reading is 87.5 and it has even been over 90.  Looking at the chart there is no instance of readings this high that did not correspond with a global recession.  The odds might be higher then 86%.  The trade data from China  backs that up as well.


Both imports and exports have been negative for quite a few months.  That is similar to the trade data I previously showed from South Korea and the U.S.  Global manufacturing is clearly faltering and recessions begin with manufacturing.  It is very hard to argue we are not in a global recession.

SPX's short term trend went neutral today.  The COMPX is still up, but barely.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.