What we have here is a Failed Breakout:

Submitted by Streetwise:

Technical analyst Clive Maund analyzes Wednesday’s drop in U.S. stock markets amid concerns over political turmoil in Washington.

S&P 500 6-month chart

The Deep State and the liberal elites have never accepted Trump as president, despite him being democratically elected, and have been trying to undermine and discredit him since he came to office, a job that is made easier by them controlling most of the media.

They are pushing for impeachment on trumped up (no pun intended) charges, and while the chances of this succeeding look rather slim, if they do there will be a lot of angry people out there and even more polarization that is likely to lead to widespread rioting and social unrest.

It is partly increasing fears of impeachment that triggered the sudden nosedive in U.S. stock markets yesterday, which has soured sentiment and probably marks the start of the traditional “Sell in May and go away” summer correction, when wealthy investors sell out and go off to pursue their more important leisure interests.

Let’s look at the setup now on the latest 6-month chart for the S&P 500 index.

On the S&P 500 index we can see that the index had been spluttering for several weeks after breaking to marginal new highs with momentum (MACD) very weak and there is certainly plenty of room for a correction with a big gap having opened up between the 50- and 200-day moving averages.

So, what we have here is a failed breakout, and it doesn’t look likely that the market will succeed in pushing to new highs in coming months, which are seasonally weak anyway, and in fact a correction here would set the market up for renewed gains in the fall.

We should remain aware, however, that if the Deep State succeeds in unseating Trump, the chaos that ensues could lead to a market crash. Barring this, how low might it correct? Probably no lower than the rising 200-day moving average.

Over the longer term, and assuming Trump is not removed from office, the outlook remains bright for the market, with money that has been sat on the sidelines since 2009 pouring in and the central banks weighing too and buying stocks in a big way, so that this bull market ends as most of them do, with a parabolic blow-off top, like the Tech bubble of 2000, and then it crashes. This is a scenario that we are going to look at shortly on the site, and our aim is to play it utilizing the strongest Stage 2 growth phase stocks, reversing to short before the crash.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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Charts courtesy of Clive Maund.

  1. Everything is upside down

    The moon cricket spent his time most wisely

    Setting the pieces to block our future

    Civil unrest amongst the people is nearing

    Invest in bullets and beans

    Everything else is

    BULL

  2. I used to trade the FTSE index with Cantor Index.   I had two computers and so many charts they were coming out of my ears.   Technical Analysis was the way to go I thought… LOL.   That was quite a few years ago.

    My conclusion eventually was that  “Markets are rigged against the little man” and “You can make a chart say anything you want”

    Technical Analysis is for people frightened (or lazy) of making their decisions based on hard investigation and facts.   They would rather have some little piece of “hocus pocus” making their decisions.

    People who use TA and are successful are just lucky.   Eventually their luck runs out.

    Anyone that could tell you what the future holds in the next 10 minutes would own the World.

     

  3. First of all tech analysis and fundamentals went out the door as soon as the fed reserve stepped in with QE.  Also since the central banks themselves are buying stocks and bonds it’s not a natural market. In essence it is probably 80% rigged by the big banks. It will go down when they either want it to or loose control. Second is I’m hearing from people on Wall St. that it would actually be good for the market if Trump were to go. He’s causing too much uncertainty and distraction to the republican agenda.

    • PS – I believe that the real enemy to Main St. is Wall St. and everything our government is doing is favoring Wall St. because they have the money to buy the laws. Everyone’s anger should be targeting Wall St. and the law makers that take money from them.

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