US equity markets are now enjoying one of the strongest rallies in two decades but this really which started on December 25th, 2018, might be challenged this week as many analysts are expecting a pullback in profit growth by corporations. Dozens of companies have slashed their profit outlook for the first quarter 2019.
This of course will have impact on those new longs and buyers of equity since December. Profit taking could start to challenge the S&P 500 highs…..we at Classiarius are looking at 2,850 to 2,900 as resistance in the S&P 500 index.
Many investors are looking past this late cycle economic slowdown that is being predicted by market participants, as well as lower profit growth for corporations and have placed their trust in the Fed, looking at the Fed’s accommodating policy as a long-range supporting factor that will take the market past slower earnings.
Still, the slower corporate profits and quality of profits are not priced into the market so this 2,850 to 2,900 range could be a top for now. We will be updating with articles in the coming weeks. Look for more volatility from US and global equity markets.