Classiarius Viewpoints – We feel that the month of March will mark the top in the S&P 500 and Nikkei 225, a healthy pullback could materialize.
We are now factoring in the US trade negotiations with China, the North Korean talks, as well as the Fed action scenarios, US earnings expectations and the global economic slowdown with China right at the top of the list of counties to watch (framing China economic weakness in and trade talks are important to our view).
The S&P 500 has tested and breached key 2,800 level that with some volume and momentum factors added, can see this “resistance range” start to form an index cap. The 2,800 to 3,000 level has tested several times since the start of 2018 and there seems to be short-term momentum in this most recent test.
This recent close above 2,800 (2,803) in the S&P is the first time it has closed above the 2,800 level since November 8, 2018. The S&P is having its best start of the year since 1991, and is up, like the Dow, 11 percent year to date. Nasdaq is up 14 percent.
We at Classiarius are now looking for the month of March to see US equity top out and start to reverse as the 2,800 to 3,000 range is likely a barrier the that will not breach, at least on this attempt.
The Nikkei 225 could continue higher to the 22,500 level, a level that we see coming under stress, and in our view, likely not breach on this attempt. The US releases on the economy, PMI, GDP forecast and other seem to point to slower growth period that combined with the trade talks that will disappoint, tigger a sell-off in US S&P 500 and Japan Nikkei 225 in the coming weeks in March.
More on these index calls in the coming weeks.