The equity market seems to be exhausted ….. and pockets of weakness are appearing.
This is an observation from out management team. Note that US equity markets are on course for a 3-day sell-0ff of increasing intensity. Also, China is seeing its stock market coming under renewed pressure. Its benchmark stock index, Shanghai, fell 3.7 precent on government action that is intended to support the stock market, but is being viewed as a desperate move or a reaction to economic weakness. This piece will focus on one very important technical signal – the Double Top.
Looking at pure technicals on the US S&P 500 Index, the market rally from April 2018 to October 2018 has been strong and consistent. Each sell-off has been met with solid and sometimes relentless buying, naturally resulting in a solid bottom and continued rally.
Throughout July, August and September, we saw solid earnings reports and naturally, equity market powered higher destroying all shorts who dared play against the trend. However, over the past week or two there have been new developments in the S&P 500 chart, the tried and tested double top has appeared.
We cannot emphasize enough how important this technical chart point has become in mature rallies.
Our in-house analysis points to a short but deep sell-off in the coming weeks.