• Francois Abley

Historical High records expected for all major U.S Index

Equity Market technical view

After a firm and hardened reflection, I religiously believe that our three legendary indices which are the S&P 500, the Dow Jones 30, and the NASDAQ 100, will fetch historical and unbelievable records by 2020. I know this may sound crazy, disproportionate, and even unrealistic for certain; But let me explain what motivates me to come up with such a result. Looking carefully at the 3 graphs, we see in fact, that they all have the same configuration and all end up with the same challenge that is to keep it costs above the range of their average annual yield which is between 15 to 20% on 50 years the real estate market is 12 to 15% and finally the bond market is 8 to 10%. These figures come from a study carried out by FRANKLIN TEMPLETON INVESTMENT, which specializes in wealth management and investment in securities. It is important to recall these figures because they allow us to situate the American indices in their particular contexts, which is the one of the race against the clock in order to have the best annual return possible to reward the bigger fortunes from the big investment funds that have taken, and are taking a lot of risks so as to achieve exceptional performance. In 2008, there were serious financial abuses in the financial markets that ended up looking like a big Casino. The major indices do not vary at the pace of stock speculators but rather large investment funds, hedge funds, and large pension and insurance funds that manage colossal fortunes in terms of investments. This is an accurate size because this environment of banking and financial deregulation coupled with an ultra-accommodate fiscal policy (accumulation of debt stock) orchestrated by the American President is largely favorable to them because it is from there in principal that he pulls his electorate (his friends from Wall Street).

The environment and the general sentiment that dominates the current financial market, is curiously similar to that which preceded the period of 2009, thus during the collapse of the financial markets. In fact, when almost all of the financial market experts and financial professionals agreed that everything was going well, the economy was doing well, we were on top, etc..., it is usually the crises that occur and stock market collapses. In 2007-2008, when at least 2/3 of the investors, financial market professionals all agreed that the financial markets were doing well, the S&P 500 had lost no less than 55% of its value during that period. As of September 2009, until January 2010, when all observers, and finance professionals unanimously agreed that the financial markets were in the catastrophe, the S&P 500 had achieved 28% alone in this Period. We are in a market phase where worries prevail and the moral of investors is conditioned by the rhythm of geopolitical and commercial news (China vs USA, Mexico vs USA, USA vs Huawei, OPEC vs Trump, etc..), as well as at the level Economic and Monetary Policy (FED). But what should be remembered? It is simply a matter of keeping in mind that the consensus is always wrong about the real situation of the economy because of the political, economic and financial stakes that are guided by the elite. We all know intuitively, that all these factors of the actuality that have been quoted, are in fact only instruments of negotiations to establish and affirm a certain global leadership. The economic and financial crisis will only intervene when the time comes by itself, and the fact that the world would be confident about the vision of the evolution of the financial markets

The American President will do everything in his power and influence, to maintain the high indices because for him, the progression of index to new heights is a sign of good economic governance, and thus a presidential campaign argument. All the more so, that he almost swore body and soul to militate in order to get a low dollar with low borrowing rates to promote over-consumption of American households and thus maintain a spiral of domestic spending that should impact positively, and directly U.S GDP. Except that until then, the result of this plan has not been expected given the inflationary allure of the American economy. So, therefore, it is the big hands (large flow of capital) that artificially maintain the high indices, favored by a banking climate and an accommodate Government policy (financial stimulus with large pump, tax plan of companies, oil quotas etc.). Reading and finding this political and economic situation gives me the quasi-certainty that the margin of progress of the indices is sufficiently broad and will also be conditioned by the pace of the upcoming US elections whose maturity is in November 2020. So I come to the conclusion that:

TECHNICALLY: Wolf wave, rising enlargement triangle, regardless of the Chartism connotation that one will lend him, always is it that as long as we remain above the blue magnetic lines (area of attraction between sellers and buyers) in terms of These different indices will continue to rise. This game will end when, we'll pass below the moving average of 250 periods. Until then, we have never gone below the moving averages. So the thresholds to be monitored are NASDAQ (7015), Dow Jones (24 500), S&P500 (2700). The objectives to be achieved are therefore 3000 pts (S&P 500), 30 000 pts and approximately (DJIA30), and finally 8000 points (NASDAQ100).

FUNDAMENTALLY: Macroeconomics data relatively stable even though very bad NFP (75K released vs 180K expected), stable bond yield rate with increasingly frequent curve inversions (the market will eventually be accustomed and risk ignoring it), rate low borrowing, I personally believe that the Federal Reserve will lower the rates to the maximum once this year or will not touch it outright; OPEC, Russia and Saudi Arabia may agree to stabilize the price of oil barrel with targeted quotas by periods, PMI manufacturing and inflation figure in stabilization, correct quarterly GDP even if below expectations (down 4%).

It is therefore for all these reasons, and despite my reading of the American economic and political situation, that I firmly believe that the indices still have the margin to progress and reach the historical record levels mentioned above.

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