This evening’s comments will be brief. Not much has changed in terms of short-term bullish rallies within a bear market. A key level of support @ 1870 was violated and therefore I am still anticipating another test of the low @ 1812. From a longer-term or monthly perspective, potential support tests are @ 1785 and 1570. Whether either scenario is realized remains to be seen. Anything is possible but the accomplishment of such would be remarkable considering:
- The current P/E multiple for the SP-500 exchange traded fund (SPY) is already @ 16.
- Retracement to the above price levels results in market valuations ranging from @ 15.7 to 13.8 P/E levels (assuming no drastic downward revisions in earnings estimates).
- The U.S. economy is easily generating minimum GDP growth @ 2% and although the rate of its expansion has decelerated, it is still more favorable to some other G20 countries.
- The Federal Reserve is biased toward raising rates while other major G20 countries are in economic contraction and/or continue to ease monetary policies.
Keep your powder dry @ Hillbent…
*Trends: ST = short-term; MT = Intermediate-term; LT = long-term
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