A tad tardy on this but here is the monthly review in an exciting 2019…
Starting with the S&P500 futures, the monthly chart tells of a few significant things. Firstly, the January candlestick is massively bullish, and most likely signals an about turn in trend. This needs to be followed through with higher highs in February and March. The pattern of movement can be correlated to a recent pullback in 2015-2016. Notice the spike downs and the lower long tails, which indicate a bullish rally building up in the early days. We are seeing something similar here too; and this model suggests that there should be a meeting of the last high. The obvious difference here is that the range of the current pullback is double that of the previous episode in 2015-2016.
Overall, it appears that the S&P500 has a bullish bias. This bias is may carry forward to the whole year as well due to a very bullish January barometer.
Looking at some forward indicators, the JNK High Yield Junk bods ETFs point to a very bullish RISK ON scenario, with a bullish January marubozu engulfing the long bearish candle of December 2018. Just looking for a follow through with the MACD to turn bullish.
Another leading indicator is the DJ Transports, DJT. This monthly chart appears bullish as well, in a similar fashion to the S&P500 futures.
The broader market small caps Russell2000 ETF is also supportively showing a bullish bias.
Moving along to global markets, let’s look at a few of my favorites…
The Shanghai Composite just clocked a bullish inside candlestick, and the month of February needs to complete with another bullish candle for a decent recovery. Concern for this comes along with a two week closure of the Chinese markets as well as current volatile trade concerns.
The Emerging Markets look a tad better with a very large bullish candle that has the last couple of months made into some sort of sandwich followed by a very bullish candle. This came with a break above the 55EMA as well. EMs do look very bullish at the moment.
A favorite, the Latin America ETF, appears very bullish as it broke out of a trendline on a monthly basis, and above the 55EMA. The MACD has also turned bullish, and this appears to be one of the leading markets, with one of the largest potential of over 15%.
Despite calls that this is a major dead cat bounce, I have moved beyond that to see that funds are flowing in in more than massive amounts and as long as this inflow continues, we are more and more likely to see a recovery similar to 2016. So for now, it’s bullish.
Just for the record, I read a MarketWatch op-ed presenting evidence about the market being in a bull-trap but I beg to differ, at least for now. In the article, which you should read too, I felt that the data was force aligned and ignored other factors in consideration. For example, the current technicals were compared to large events, where there is nothing significantly solid of major concern just now. Hence, my comparable is 2015/2016 pullback, which was ignored. Just for the record. ☺️
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