We follow the trends and capital flows. Remember, this is a global market, it is all connected.

Stocks

The S&P 500 had just surpassed Friday’s high with about an hour to go in today’s trading, then gave it all up and closed down 16.34 points or .59% on the day.

Looking at the lower chart we see that the Relative Strength Index (RSI) at 27.71 is still below 30, indicating that the S&P 500 is still oversold here. Continue to watch the 200-day MA (link line), as it has in the past acted as a very solid support level for the S&P 500. If the S&P cannot climb back and close solidly above this support, it means we are not out of the woods and that more moves to the downside are certainly possible.

Long-term trend remains bullish

Immediate trend is bearish

Our current position is NEUTRAL

Gold

Gold had another up day, closing today up 8.30 or .68%. Gold has broken out of its near-term downtrend channel and now needs to close above 1246, then push through and close above 1260, 1307, and 1377 to have a chance of having a solid bull run.

Long-term trend is bearish

We follow the trends and capital flows. Remember, this is a global market, it is all connected.

Stocks

In yesterday’s update we showed how the S&P 500 dropped a whopping 94.66 points or 3.29% and in doing so blasted through its 2825 support level.  We also noted the NASDAQ fell a massive 4.1%, the largest decline of the year. We further highlighted how the 200-day MA for the S&P 500 was a key support level and that we needed to watch to see if it would  hold.

Well today the S&P 500 lost another 57 points or 2.06%. Interesting that the NASDAQ, the big loser yesterday, lost “just” 1.3%. What we want to keep an eye on is that 200-day MA (blue line).  As we can see on the 2-year chart, the S&P 500 had tested this level three times (red arrows) but today is the first time that the S&P 500 has closed below its 200-day MA. Typically during bull markets, stocks trade above the 200-day MA, while in bear markets they trade below it.

We now need to see if this is the start of a deep correction, even a crash, or if it is simply an overshoot of support. If we look at the bottom portion of the chart we can see that the Relative Strength Index (RSI) is now at 17.66 and whenever it is below 30 it is considered oversold, suggesting that the S&P 500 could soon rally back above its 200-day MA.

There is no end to the opinions as to why the markets are being hit so hard here. Be it the recent jump in interest rates, trade concerns, computer algorithmic trading, issues in Italy, and let’s not forget politics, as the US election is fast approaching.  Whatever the opinions, we just watch the numbers.

Key levels we need to watch here for the S&P 500:

• Near-term Support at 2717
• Next Support level at 2700
• Near-term Resistance at 2775

The S&P 500 needs to close tomorrow above 2717 to signal we could be near the bottom of this correction. If 2717, then 2700 are breached, then a deeper correction is in the cards.

Bonds

Yesterday we noted that “Typically, when we see a big sell-off in the stock markets, capital flows into bonds, driving up bond prices and pushing yields lower. That did not happen today!“

Today, we did see capital move into bonds, which pushed yields lower. The US 10-year is now pushing up against its near-term downtrend line. IF equities continue lower, we would expect to see bonds continue to push higher, meaning yields lower.

Gold

Yesterday we also highlighted how gold is typically a go-to ‘safe haven’ play when we see deep market declines, but that was not the case yesterday. Well today gold finally got some love and jumped 34.20 or 2.87% for the day.

Cryptos

While gold was a big ‘safe haven’ play, there was virtually no reaction from the crypto currencies as Bitcoin actually moved lower today.

There are tons of opinions out there, but we will continue to let the markets tell us which of these sectors will rise, and which will fall.

Quick Note: We have had a lot of inquiries asking how can investors protect themselves from significant market corrections or crashes. While The Trend Letter uses basic insurance for a correction, note that our hedging service Trend Technical Trader (TTT) is designed to make money in a down market. Its 4 recent hedge positions are up 37% (opened Oct 4/18), 33.5% (opened Oct 4/18), 33% (opened Sept 12/18), and 16.4% (opened Sept 5/18). These TTT trades are simple to action, just the same as any trade recommended in  Trend Letter. We are offering a subscription to TTT for only $399.95 (regular price is $649.95). Click Here to get that price. It’s your money – take control.

Stay tuned!

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To be a successful investor today you must understand what is happening in the markets globally, one cannot simply look at what is happening domestically. Capital flows out of perceived risky areas, and into perceived safer areas.  The current perceived risky area is the emerging market debt, and in particular, emerging market debt denominated in $US.  This is a theme that subscribers to The Trend Letter are well aware of, and one that could well be the start of the global debt crisis that we have have warned about for a couple of years now. We recently posted a blog on this issue which you can read here.

When viewing the following charts, note how it is only US equities, and the US dollar that are in uptrends.

Global Equity Markets

Asia

The Asian markets opened first and sold off on light volume, as concerns continue to grow over US dollar denominated debt in emerging market countries.

Shanghai was down 1.68% on light volume. Down 24% since January

The Japanese Nikkei was also down, but only .82%. Down 9% since January.

Europe

European markets were the next to open and they too felt the tension over emerging market debt, as well as trade concerns. The UK FTSE, German DAX, Italian MIB, Spanish IBEX, were all down about 1%, but the French CAC lead the decline at -1.57%. CAC down 6.7% this year.

Turkey saw its stock market drop .43% today, and is down about 24% this year.

North America

North American stocks were mixed today, with the Dow Industrials up slightly by .09%, but remains in a solid uptrend, up 19.4% year over year.

The S&P 500 was down slightly by .28% for the day, but is also in a strong uptrend, up 17.5% year over year.

The Nasdaq was the big loser in the US, down 1.16% with Netflix leading the decline, down over 6% on the day. Tech stocks have been the biggest gainers, up 25.7% in a year. But they will also take the biggest fall in a correction.

Global Currencies

US dollar was down slightly on the day. Expect the $US to remain strong against most currencies for the foreseeable future.

Euro struggling to gain traction. We expect the Euro to go into crisis mode in the next year.

Japanese Yen can be a ‘safe haven’ play, but concerns over Japanese debt is well founded. Ultimately, the Yen will decline steeply.

British Pound will continue to struggle with BREXIT noise.  We are bearish long-term.

Canadian dollar heavily impacted by NAFTA concerns. Will rise when commodities rise.

Turkish Lira down over 47% in the last year. Could be the canary in the coal mine regarding emerging market debt crisis.

Argentine Peso down 56% in the last year. Another leading candidate for debt default.

In addition to the very real and legitimate concerns over emerging market debt, we have the coming US elections, and the concerted effort to take down Trump. Whatever one’s feelings are for Trump the person, his policies have been very good for the markets. If Trump goes down, so will the markets. If you don’t have a strategy to protect yourself in a severe market decline, check out Trend Technical Trader.

Stay tuned!

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Since March 2002, Trend News Inc has been publishing The Trend Letter as one of the top performing investment newsletters in existence. From its recommendations to buy gold in its very first publication at $290 in March 2002, and subsequent sell signal at just under $1,800 in August of 2011, The Trend Letter was off to a tremendous start. While gold climbed over 500% in that timeframe, most of the gold stocks recommended performed even better.

It did not stop with gold, as in 2003 the recommendation to load up on uranium stocks netted subscribers massive gains, from 0ver 300% to gains of 1023%, 1478%, and even 1525%.

BUY recommendations are important, but it is our SELL recommendations that ensure the gains and protect our subscribers when markets turn down.

In July 2005, we warned about a real estate crash and strongly urged subscribers to get unleveraged if speculating in that market. We said:

“Never before have homeowners and investors been so heavily leveraged in the homes they have bought, and never before have they been so optimistic in their expectations. Unfortunately, we believe that like never before, we will see some serious losses in this market – just like the tech boom. Do not be the last one into this market and expect it to keep going up. If you have bought a home to enjoy and you can afford it – relax. If you have bought on sheer speculation and you cannot afford a drop in price – be warned.”

In December 2006 we started warning of a stock market meltdown. Then in May 2007 we gave a final alert…weeks later the top was in

 “We have locked in our profits on most of our equity positions, hopefully subscribers have followed our lead. We know that it is tough to SELL when everyone one is telling you to BUY, but our indicators are signalling this is the final warning to get out of equity stocks.”

Since 2009, the equity markets have been on an historic bull run, and there may still be a final melt-up run before the top is in. The key question now for every investor is, are you prepared for the inevitable market melt-down? As we have warned, so far in 2018 we have seen volatility rising. It is a statistical extreme that a major index would vacillate so many times, as it has done this year, around the year’s break-even level.  Especially this far into the year.

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A yearly subscription to The Trend Letter normally costs $599.95 per year.

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