Week 50 Major Markets Trending and Performance
Trending Heat Map
Not surprised to see mostly amber in the trending heat week after a bad week. The Dow Jones remains the strongest and, interestingly enough, markets outside of the US are somewhat better off. I added the Eurozone Monetary Union EZU to this list because I think it belongs here.
So, from a trending perspective, we are in a situation where anything can happen. When everything turns bad, then the only way to go is usually higher. Unless there are some things to deal with first. We will look at more of the technical patterns using the S&P 500 later in this note.
Week-to-Week Performance
What is interesting to me is not that they are all red this week. But that they are all about evenly red. It is very orderly, and to me, that is saying that there is some level of inevitability to the markets understanding of what is happening to the economies of the world. So, we have had 2 down weeks after 2 up weeks. I do not consider that a pattern, but markets do have a tendency to mean revert. Even in the short-term.
Performance 2022
December has been bad for all markets. No exceptions. The gains we saw in November seem like a distant memory. Over 3 months also most of the markets are down. The European Monetary Union EZU is a standout though. I do have a small trade on in EURL which is not doing well anymore. So, I will likely have to take it off.
Bottomline is that the markets are not having a face-ripping rally in December and there does not seem to be a Santa Claus gift for the season. The year-to-date returns on all the markets deteriorated in December. We have less than 10 trading days left in the year. So, we will see what happens. I do think the risk is further to the downside.
S&P 500 Chart Observations
I do not like the setup at all. I had a thick trendline connecting the 3 lower highs for the year. The price could not meaningfully pierce it and breakaway. There was a small bullish channel that was forming, and price could not stay within that as well. Now I drew another thick trendline which is not exactly connecting the lows but close enough. Thats the downward channel and we can see where it goes. Clearly, there is a risk that price touches the prior low at around 3500 from October 2022 sometime in January 2023. I would say keep playing to the downside until there is a mean reversal.