Embrace The Fear - Russell 2000 And S&P In 'Strong Buy' Territory

Of longer-term charts we have a breakdown and new swing-low in the relationship between the Dow Index and Dow Transports. This is a relationship which has been in decline since 2015 - effectively the last legs of the Obama era - from which Trump's crazy, deregulation-friendly presidency has managed to gloss over until now. What this means for the duration of the decline remains to be seen but this relationship will need to reverse course before lead markets bottom. With Mueller and Brexit to play out their final acts, 2019 could be a tricky year. Again, investors shouldn't worry and be happy to lap the chaos up, this situation has required nine years of waiting.

 



Nasdaq Breadth metrics are at levels last seen in 2011 and 2016, and are just a shade away from that in 2008. Again, we are looking at prior periods of deep value and the outlook should be one for optimism - not pessimism.
 


New S&P 52-week lows have created a marked spiked high, again, a scenario which has surpassed the swing lows of 2011 and 2016 and may ultimately, offer a stronger swing low than either of 2011 or 2016.
 


The Nasdaq offered its own 'buy' based on historical action in the percentage of stocks above the 200-day MA, finally tagging the support line reached in 2002 and 2011 - although not yet the levels seen in 2009.
 


The key take home about all these charts is that markets are in a major value phase. Things may still get worse with Trump and Brexit but we are at endgame purge of the post-credit bubble excess.





 

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Gary Anderson 1 month ago Contributor's comment

Donald Trump is threatening to close the border and all economic activity with Mexico. This could have a devastating effect on small business in America. Just FYI, Declan. I posted this with the NY Mag article link:

Let's not kid ourselves. Donald Trump hates Mexico. He wants revenge over those he hates. Read this and you will never doubt this truth again: nymag.com/.../...overnment-shutdown-recession.html