SP at a resistance area, by Blackfort CIO Dr. Andreas Bickel

 

SP at a resistance area, by Blackfort CIO Dr. Andreas Bickel

Overbought, a possible consolidation after the strong rally? Most common equity indices have risen around 10-12% YTD. The most hated rally, which started in March 2009, is still alive. However, after such a strong move the S&P 500 is now not only overbought but also at a resistance area.

In normal times, a consolidation would be the next step. However, there are many unforeseeable political events ahead of us. The Brexit, the outcome of the Kim-Trump summit, the US China trade war are just some prominent examples. Each one could be used either for “sell the fact” or as a catalyst to further push equity markets up.

Mid-term I would expect that the climbing the wall of worry is not over yet. The global economic slowdown is unfolding and central banks might implement more QE. E.g., the ECB might next week announce that a rate cut in 2019 is very unlikely and could start to implement the next TLTRO  program. This stimulus, however, might be enough to prolong the business cycle. Therefore the pain trade could continue.

 

 

Source: https://www.linkedin.com/feed/update/urn:li:activity:6506508171492749312

Published: 27.02.2019, by Blackfort CIO Andreas Bickel

 

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