Time to Short Yet?

I have done precious little posting over the last 6 months or year, in large part because the market has been marvelously uninteresting. It has largely served as an undramatic source of steady income for those heavily invested on the long side. Despite my Trump-loathing and deep skepticism of both U.S. economic policy and the state of the global economy, the chart-reader in me sees no cause for skepticism in the S&P (SPY) chart. (That said, later I will suggest that some big-name tech stocks do seem primed for a short attempt – so stay tuned!) As it stands, SPY looks like it’s in a garden variety upward trending channel for now.

2017-06-26-SPY_CHARTS

My economic skepticism is more comfortable with the upward trend evident in long term U.S. Treasuries (TLT). TLT bounced off support, and has trended up this year. To me, only genuine economic growth and excitement would seriously damage Treasuries, and I don’t see that happening. Here is the TLT chart:

2017-06-26-TLT_CHARTS

Emerging markets (EEM) have surged over the last two years and are pushing against a decade-old downward trending line of resistance. It’ll be interesting to see if EEM can break through to the upside. I would (and maybe will) bet against it. That is some pretty well-established resistance there:

2017-06-27-EEM_CHARTS

One interesting asset class to watch is junk bonds (JNK). If the equity market is running into weakness, JNK is likely to provide an early indicator. It appears to be near the end of a slightly rising wedge pattern that basically includes the duration of the Trump election through present.

2017-06-26-JNK_CHARTS

Now for those shorts.  Amazon (AMZN) has had a phenomenal run in recent years. It recently made headlines with its purchase of Whole Foods. Surely buying governments wholesale in on its to-do list at some point in the not-too-distant future. Lord knows the U.S. government is for sale. All that said, the stock’s ascent over the last four years is a sharply rising wedge pattern. There is still room on the upside, but between the hype and that pattern, I’m taking a crack on the short side here.

2017-06-26-AMZN_CHARTS

Over a slightly shorter time frame, Google, err Alphabet (GOOG) has formed a similarly rising wedge pattern. It is still in a wider phase of the pattern so may have more room on the upside without breaking the pattern, but it’s butting against the resistance trendline, so I’ll take my chances with a short here.

2017-06-26-GOOG_CHARTS

I’ve seen nothing to alleviate my big picture concerns. If anything, they are more pronounced than ever. That said, I think the market casino is primarily self-reflective. It is not a reflection of the economy so much as a reflection of its itself. I think it will take a major catalyst to break through the momentum and market-wide commitment to self-induced price growth for the benefit of major market participants. Who knows when the spell will break or what will finally break it.

 

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