Target levels for Year-end for the S&P 500

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In Wednesday’s blog after the S&P 500 soared a record 116.60 points or 4.86%, we warned “be careful here, we are not out of the woods yet!” Monday is year-end and here are our key targets for a Monday close:

Friday’s close was 2485.74

2575 – a Monday closing below this resistance level (top red line) suggests that this recent rally will be short-lived and a re-test of 2400 is likely.

2395 – a closing below this support level (lower green line) suggests a steep correction is possible.

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In the bigger picture we need to see a break down below its 9+ year uptrend channel to open the door for a steep correction.

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An incredibly reliable leading indicator that has an incredible record identifying stock market tops:

 We show this indicator to our subscribers often as it is a key leading indicator. You have probably heard the term ‘inverted yield curve’ but likely do not know how reliable it is at warning of a coming recession and stock market top.  The yield curve we are referring to is the spread between the yield on the 10-year government bond vs the yield on the 2-year bond.  These yields tend to move for different reasons, with the longer-term 10-year yields moving based on the market, while the shorter-term two-year yields move largely due to the actions of the Federal Reserve.

Typically, long-term rates are higher as investors demand higher payments due to the risk of lending their money for a long time, which makes sense. But this last year the Fed has been hiking rates, which has pushed up the yield on the 2-year bonds faster than the yields have risen on long-term bonds.

Below is the current chart of the spread between the 10-year yield and the 2-year yield. We have marked with red circles each time since 1988 where the yield curve has inverted, meaning that the short-term 2-year bond had a higher yield than the longer-term 10-year bond.   The key is that every time this has happened, between 12-18 months later the stock market topped and then reversed, heading much lower. As we can see on the right hand side of this chart, the yield curve is not yet inverted, but it is very close, just .18% points away. But remember this is a leading indicator, meaning that even if it inverts next week,  we should have between 12-18 months before the stock market top is in.

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That doesn’t mean we won’t see more volatility like we are experiencing now, it just means we are not likely to see the final top for a while yet.

There will be a full update for subscribers in this weekend’s issue of the Trend Letter.

Stay tuned!

Stocks rally for single day record

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After a being down almost 16% so far in December, the S&P 500 soared a record 116.60 points or 4.86% on Boxing Day. A recovery was certainly not unexpected to Trend Letter subscribers as we have been warning on how oversold the market was. But be careful here, we are not out of the woods yet!

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Typically, when you get such a large sell-off there is a rally, but that rally typically dies and we see a re-test of the lows. While we could see a nice rally here to end the year, our models are projecting that we see another test of the lows, likely early in the New Year.

Stay tuned!

 

Don’t panic! Profit in a declining market

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Below is today’s update from our hedging service Trend Technical Trader (TTT). Links to archives will not work as this is subscriber content only.  But this should give you a good understanding of how a good hedging service can not just protect you in a declining market, but  actually allow you to make significant gains in a relatively short period of time. If you wish to subscribe to TTT Click Here to receive a $250 discount and pay only $399.95.

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The DJIA dropped 1656 points this week, in what is the worst December for stocks since 1931.

Posted October 29: Please keep the DJIA chart and related commentary posted in the “General Recap” section below in mind. While the quarter isn’t over yet, we currently have a situation in quarterly momentum not seen other than on December 31 1999 and June 30 2007. Those dates immediately preceded the biggest bear markets of the past few decades. It’s still a very long way down, in points and in time, before the gross excesses of the past several years are unwound.

Posted October 03: While the senior index has made new all-time highs this week, the typically leading small-caps printed a two-month low Tuesday. That’s a historically unprecedented divergence. The only comparison was in early April of 2000, before one of the biggest market crashes of all time, when the DJIA made a two-month high while small-caps made a two-month low.

Small-caps often lead markets. The Russell 2000 Small-Caps index closed at a 2-year low and is not just down since the start of 2018 but down since the start of 2017.

GS (Goldman Sachs), our market barometer, closed at a 2-year low and below a supportive uptrend stretching back more than a decade to the low of 2008.

Don’t think this can’t happen to the DJIA or S&P500, or your favorite stocks. It can, and arguably it should since the excesses of the past decade are nowhere near unwound.

Stocks are just now finally oversold in the short term, neutral in the intermediate term, and still massively overbought in the longer term.

Keep in mind that it is from such slightly oversold conditions that crashes often occur, and that there’s been no sign of panic selling so far so that could still happen before a significant relief rally begins. The more likely short-term action however is a bounce into the new year.

Hedge position 1 (actual symbol subscriber content only) hit our sell limit today for a gain of 70% in 10 weeks!

Hedge position 2 (actual symbol subscriber content only) is up 47% for us since September. We’ll offer it up for sale as per the “Open Positions” section below.

Hedge position 3  (actual symbol subscriber content only) was recently sold for a gain of 40% in 5 weeks. We’re raising the buy limit to repurchase it.

Our 4 positions (actual symbol subscriber content only) to short junk bonds have closed at an 18-month high! We’ve raised stops on two of those.

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***Understand that these hedging strategies are simple for any investor to action, a simple click of the mouse on your online trading account, the same as trading any other stock or ETF.

Want to subscribe?

Option 1: Subscribe to TTT and have a plan to not just protect yourself during market corrections & crashes, but to actually profit from it, CLICK HERE and save $250 off the regular price and pay only $399.95.  It’s your money – take control!

Option 2:  Subscribe to both the Trend Letter & Trend Technical Trader for only $699.95, a savings of $550.00. CLICK HERE to take advantage of this offer.

Stay tuned!

S&P hits our target today, but is this the bottom?

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For months we have highlighted our model’s target of 2470 as a low for the S&P 500. In our November 11th post we showed our model’s bearish projection for the S&P 500 to have a cycle inversion targeting a drop to 2600 and even 2500 by year-end.  In our November 20th post we showed the following chart of our models’ projected path for the S&P going into year-end.

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As we can see on the chart below the S&P is trading almost exactly as our model projected, closing today at 2467, just 3 points off our target.  After the initial test of 2500, our models called for a rally back to 2600, then another re-test down to 2470. Understand that if the S&P breaks below that 2470 support area we could be in for a much deeper correction. Watch Friday’s close, we will update subscribers in Sunday’s issue of the Trend Letter.

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The fundamentals that are currently driving this correction are:

  •  The Fed’s decision yesterday to raise rates another .25%, plus targeting two more increases next year
  • Ongoing concerns about trade, especially with China
  • Brexit
  • Ongoing concerns about Italy and the EU
  • and now the threat of a US government shutdown

With trade, here is what we told our Trend Disruptors Premium subscribers this morning…

“We know that Donald Trump watches the markets closely as he feels it is virtually an arbiter of his success or failure as a President. We know that ‘The Donald’ will want a rising stock market as he enters his re-election campaign and he knows he will not get one until he gets some kind of deal with China. We believe that Chinese President Xi also needs a deal, so we expect that common interest will lead to an agreement.”

Bottom line is that technically speaking the S&P has followed our model’s projection to a tee and now we need to see if this 2470 range is indeed the bottom. As noted in prior issues, our model projected that after hitting 2470 we should see a rally back to 2600 and then likely another test of the 2500 level.

Are you worried?

If you are worried about your investments and are losing sleep at night because of this market collapse, seriously think about subscribing to our hedging service Trend Technical Trader (TTT).  TTT currently has two open positions that are directly hedging against a stock market decline. Those positions are up 63% (since Oct 4/18) and 38% (since Sept 5/18). In addition to these two open positions, TTT has recently closed two hedge positions for profits of 49% (in 2 weeks), and  54% (in 6 weeks).

The message here is simple, you do not need to lose money in a declining market, you can not only protect your investments and your wealth, but you can actually make significant gains in a relatively short period of time using these hedging strategies. Think of using these hedging strategies as you would think of buying fire insurance for your family home.  Understand that these hedging strategies are simple for any investor to action, a simple click of the mouse on your online trading account, the same as trading any other stock or ETF.

If you would like to subscribe to TTT and have a plan to not just protect yourself during the next market correction or crash, but to actually profit from it, CLICK HERE and receive $250 off the regular price and pay only $399.95.  It’s your money – take control!

Also…

We will make the same offer for those who are not yet subscribers to the Trend Letter. CLICK HERE to subscribe to the Trend Letter for only $399.95, a savings of $200.

Best Deal…

Subscribe to both the Trend Letter & Trend Technical Trader for only $699.95, a savings of $550.00. CLICK HERE to take advantage of this offer.

Gold

Gold is finally breaking out and has now pushed through near-term resistance at 1262 and more importantly through its 200-DMA.

Gold bottomed in mid-August, and has since slowly been moving higher, and has been increasing that pace since mid-November. Next target is the strong resistance in the 1280-1300 area.  Looking good so far!

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Stay tuned!

Can Healthcare be better with AMAZON ?

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Many industries and market sectors are, or are about to be, disrupted by the introduction of Artificial Intelligence (AI). Healthcare is a very large industry and market sector in most developed countries, often being the first or second largest national budget item.  There are big dollars in play here.  The healthcare digitization market is estimated to be worth about $300B annually and there are several health-information-technology companies already serving this market, like Cerner, Optum, Medidata, Epic, Viva, and IQVIA.  So, is there room for a disruptive new kid on this block?

Amazon has announced a new service called Amazon Comprehend Medical.  They made the announcement in November, and the objective is to help hospitals, insurers, and pharmaceutical companies analyze all the health record data they have.  This service would use AI to sift through all medical data, structured and unstructured, to pull out information such as diagnoses, symptoms, and treatments.  Amazon also thinks that AI analysis could be a big help in many areas, such as clinical decision support, revenue cycle management, clinical trial management, plus building population platforms and fulfilling privacy mandates.  This has been tried before by some big players, like Microsoft’s Healthvault and Google Health, both failing to deliver much to the market so far.  The stakes are high and it will be tricky for Amazon to tap into the health-IT space, where heavy hitters like Cerner and Optum have been laying the groundwork for many years already.  Amazon may have to rely somewhat on existing customer recognition and trust in order to penetrate this market, and they may need to touch on many parts of the healthcare universe before gaining a foothold.

Amazon acquired PillPack in June, an online comprehensive pharmacy service, and has plans for a joint venture with JP Morgan and Berkshire Hathaway to supply hospitals with health equipment.  This may serve to get a foot in the door and allow Amazon to enter and disrupt this market sector.

Several companies have a budding awareness of how AI can assist all Healthcare systems and the breadth and depth of ideas is impressive.  These ideas include many groundbreaking possible deliverables, such as:

  • Accurately predicting atrial fibrillation events
  • Confirming that a specific treatment was effective for a specific condition in a specific patient
  • Very early prediction and detection of diabetes
  • Putting these new tools in doctor’s offices and hospitals for the immediate benefit of patients
  • Presenting treatment options and plans based on AI analysis of all the data
  • Earlier detection of specific health conditions, like cancer and eye disease

As these companies explore more of the capabilities of AI, the number of ideas and benefits will grow, however, there will be some interesting dynamics when health insurers look at the situation and have to decide whether or not to cover the cost of medical “predictions” or “ suggested new treatments”.   No one is saying that Healthcare is simple – even the US President said “It’s an unbelievably complex subject.  Nobody knew that Healthcare could be so complicated”

Let Trend Disruptors be your guide to the future, as we continue to identify technology investment opportunities that can lead to financial success.

Stay Tuned!

Stocks tumble, Bonds rise, & Gold breaking out

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Stocks:

The S&P 500 was down 62.87 points or 2.33% today and was down 4.5% for the week, its worst week since March. As we can see on the following chart the S&P 500 has been trading in a range between 2600 and 2825 and is now testing the low end of that range.  If the 2600 support level does not hold, we will likely see trading algorithms  kick in and push the market lower, with a test of 2500 a valid scenario.

Watch the 2600 support level for next week, it is key. We have warned that instead of a Santa Claus rally we could well see a cycle inversion where instead of a rally we see a correction.

SPX1207

The main noise this week was the arrest in Canada (Vancouver) of Huawei CFO (Meng Wanzhou). Ms Meng was arrested at the request of the US government. On Friday in the Supreme Court of British Columbia a Canadian government lawyer said Ms Meng was accused of “conspiracy to defraud multiple financial institutions” using a Huawei subsidiary called Skycom to evade sanctions on Iran between 2009 and 2014.  According to sources she faces up to 30 years in prison in the US. This incident has the market nervous that it will negatively impact trade negotiations between the US and China.

Next week’s vote on a deal covering Britain’s exit from the European Union as well as negotiations between Italy and the EU over its budget deficit also contributed to the risk-off sentiment with investors.

Bonds:

With a risk-off sentiment in equities, capital continued to flow into US bonds, driving yields lower.  The yield on the US 10-year has broken below its uptrend line and closed today at 2.85%.

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Gold:

Gold had a good day and has now broken above near-term resistance at 1237, closing the week at 1253.

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In the bigger picture gold has been trading in a 7+ year downtrend channel, a classic bear market. Earlier this year gold managed to break through that long-term resistance level but by April gold resumed its decline and fell back into that downtrend channel. But now gold is making a run to push through this key resistance level (pink circle on chart).

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Subscribers were sent another new recommendation for gold and will get a full update on Sunday.

Stay tuned!

WAYMO versus UBER / LYFT – How Much?

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As of right now GOOGLE / WAYMO has begun monetizing some of their self driving vehicles.  Development of WAYMO self driving vehicles has been ongoing for over 10 years, and includes cars and trucks, as each is seen to have commercial potential.  In four suburbs of Phoenix Arizona (about a 160 km zone) self driving WAYMO ONE taxis are now in operation.  Generating revenue after all these years of development and testing is a significant milestone, and puts WAYMO ahead of rivals like GM’s Cruise Automation, and Uber Technologies.  All players in this field will certainly want to attract and keep customers and begin to recoup the money invested in the technology so far.

So, how does a customer use the WAYMO ONE taxi service?  First, you need to download the WAYMO ONE app and provide credit card details, and then you can use the app to notify the service of your needs, providing your location and a destination.  Much like UBER and LYFT, the app will provide a price quote and a time for pick-up.  The service is touted to be operating 24 hours a day, however, it is available now only to a few hundred residents who signed up last year, and the exact number of taxis in operation has not been revealed by WAYMO.  For cost comparison, the WAYMO charge for a 15 minute ride (about 3 miles) is $7.60, whereas the comparable LYFT charge is $7.20.

At this time WAYMO ONE taxis include a human in the driver’s seat, to intervene only in emergencies, and there is the app or in-car console to link passengers to a WAYMO ONE agent for answering questions and documenting comments.  Some report that the ride is a little slow and sometimes jerky.  WAYMO works with passenger feedback to help refine all aspects of the WAYMO ONE taxi experience.  Only a handful of other startups have monetized driverless technology, in small ways, such as Boston’s OPTIMUS RIDE that has contracts to provide driverless vehicle services in enclosed, low speed environments, like gated business parks and seniors facilities.

There are still significant challenges to making a buck in the autonomous vehicle space.  All across the USA there are many laws and regulations that fail to provide a coherent framework for designing the vehicles or the software applications needed to put them to work on their own.  Estimates are that over $1 billion has been spent on driverless technology, and over 10 million miles have been traveled.  Still, everyone is proceeding with great caution, wanting to ensure that the early adopters have only safe and satisfying experiences, generating enthusiasm, curiosity, and confidence.  Given all that, the sky seems to be the limit for this exciting, disruptive technology.

Let Trend Disruptors be your guide to the future, as we continue to identify technology investment opportunities that can lead to financial success.

Stay Tuned!