SPX -- Weekly

Everyone knows this a well advanced bull market where you have to choose the most generous
valuation methods to get even somewhat comfortable. Price momentum has remained positive
but has deteriorated noticeably since the SPX hit a major intermediate term overbought at the
outset of 3/17. Weekly cyclical economic indicators suggest that both the economy and business
profits momentum have probably peaked. On the plus side, continuing low inflation and negative
real short rates have helped the SPX p/e ratio stay elevated. As well, there is a fairly strong
investor consensus that the economy is a good year away from a genuine downturn. Fewer
players are confident that the Congress can pass tax legislation in the months ahead that might
assure a longer run for the business expansion, but hope has not been abandoned totally. Trump
has fucked up royally over the past three weeks via the North Korean flap, the handling of
the Charlottesville demonstrations, and more recently, his vicious verbal attacks on top GOP
operatives in the Senate and the press. Likely tough fights ahead on the debt ceiling, the budget
and tax reform have grown more worrisome by stupid behavior from the White House. So, the
market has lost some ground over August, although there has as yet been no downside breakaway.
SPX Weekly

There may be trouble ahead in September if the SPX fails to get above its 13 week m/a and move
back up toward 2500 right quick as that would signal more extended damage to already shaky price
momentum.