The financial markets have already “priced in” huge tax cuts, reducing red tape regulations and a massive increase in infrastructure spending.
Perhaps, the markets are now believing that the agenda is not going to occur with Al Green asking for Trump impeachment? This could result in a significant downturn for stocks if it were to unfold.
The SPX index declined more than 1.75% and wiped away about $375 billion in market value. The SPX went from a record close three days ago, to below its 50-day simple moving average on Wednesday May 17th, 2017.Institutional traders view the 50-day simple moving average as very strong trend support. The SPX level at 2407 turned out to be the best the bulls were capable to achieve. Their second attempt to push the benchmark higher failed at 2406, where the bears stepped in.
Financial Markets are Spooked!
There is a slow leak in U.S. stocks. The SPX has more declining stocks than advancing ones during this tight trading range. This is unusual behavior and resulted in lower returns over the following month.Tune in every morning for my video analysis and market forecasts on all ‘asset classes’ so you know where and why the market is about to move.
The SPX decline on Wednesday May 17th, 2017, was abnormally large, relative to the past 3 years.
These two market warning signs, the “Titanic Syndrome” and the “Hindenburg Omen” are giving a “preliminary sell signal” based on analyses of 52-week New Lows in relation to New Highs on the NYSE. On May 4th, 2017, the Hindenburg Omen was triggered on the NYSE and Nasdaq exchanges.It has a consistent record at highlighting underlying weak market conditions that preceded market trouble. On May 16th, 2017, both exchanges triggered the Titanic Syndrome. This occurs when the NYSE 52-week lows out-number 52-week highs within 7 days of an all-time high in equities within days of the major indexes closing at a one-year highs. Historically, these signals have led to further weakness over the following two weeks. As stocks were plunging, investors are currently panicking out of stocks and into the “safety” of bonds.
