Market update 16 January

Posted: January 16, 2017 in Uncategorized

There has been over 64 days without a move of over 1% on the SP500 (2 longest streak in this rally and 30th longest since 1928).

Usually this “coiling” unwind quite powerfully.

It is too early to know which direction.

The market has been very resilient, so the move could well be on the upside.

As a positive there is the reporting season – on the back of the President Trump election this reporting season can be positive as over the last 5 years US companies have reported a positive beat of earnings by 4.5%. This could bring the SP500 to its natural target of 2,400 (ASX 200 6,000)

On the other side this week there is the President Trump confirmation and the scrutiny around if he can deliver his promises will intensify. But in effect the SP500 has to fall under 2,070 (so a fall of over 8%) to deny the trend towards 2,400.

SP500 can do that (January 2015 did -15%), but it can sustain quite a bit of damage before falling over.

Still doing my 2017 analysis, but my idea for the year is Rally – Wobble – Rally -Correction – Rally.

 

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