Folks, the high-yield debt chart has been a major algorithmic component of how accurately I’ve been able to predict the market downturn in early October. I signaled the Bear siren again in last Saturday’s weekly show because of the high-yield debt chart.
Look at what high-yield debt has been doing.
You’d have to be CrAzY to go long anything in this market. Maybe HYG will turn around tomorrow, maybe it won’t. That’s not the point. The point is as of right now, this very minute, with all available data we have at our disposal, there is nothing that says you should go long this market right now.
We are still operating underneath a bearish cross of the 13 MA crossing below the 30 MA on the S&P 500 1 hour chart:
Worse, notice the Parabolic SAR sell signal on the daily chart of the S&P 500.
Institutional traders and money managers are selling into upward moves. CEOs have personally been dumping their own stocks for the last 2 years while using your money to buyback shares.
Why is this happening?
We don’t have to know why, just that it is but here’s my best guess. Fed rate hikes are slowing the economy much faster than the Fed thought. Apple (AAPL) produced a phone that was too expensive for consumers in a rising rates environment and now they are dealing with slowing iPhone sales which is hurting Apple suppliers and the entire technology sector. This slowdown in the economy is occurring about a year after the Trump tax cuts boosted earnings. Come Q1 2019, the comparable earnings growth to the previous year is going to look bad because there’s no way earnings growth can sustain the YoY figures. Institutional traders and money managers know this and so they are pulling back and booking profits now while the market is not too far off its all-time highs.
The slowdown in the US economy is relatively new compared to the rest of the world that already has been slowing down because of rising interest rates in the US. Oil is under pressure as worries mount that the entire global economy is slowing down and thus demand for oil is slowing too.
The other issue is trade war concerns from the rich and powerful who have been the main benefactors of globalism and international trade. These rich investors are concerned that their globalist scheme of making stuff in Mexico and China, and selling that stuff into the US is coming to an end. These rich guys are selling out of international stocks and pulling the entire market down too.
Going long, then getting stopped out, then going long, and getting stopped out is like banging your head over and over again and getting no where. All you end up with is a sore neck the next day. Instead, I say just chill in cash.