Stock markets continue their Christmas entirely
The closer to the end of the year, the more shocking of the movement we are seeing in the financial markets. It seems that what was supposed to happen a long time ago and warned very strongly, I decided to be drastic, quickly and rapidly at the end of December 2018. The flight of investors from the long-superheated
the U.S. stock market on the last day before the Catholic Christmas has intensified, yesterday the S&P500 has accelerated the decline, falling to around 2340. What I was expecting for a year or two, there was , as always, “suddenly”.
With of highs at the level of 2942, in which the S&P500 was trading in September, the index fell -20,50% (from opening levels of the year the year the drop was -13,11%) . The advice of former fed Chairman Alain Greenspan, voiced in a recent interview, is absolutely justified, and the longest since 1960-ies of the growth period of the US stock market ended.
The appeal of the Ministry of Finance of the USA to the leading banks of wall Street and the convening of the emergency group on financial markets at the White house did not bring the Christmas miracle on Wall Street.
Although the fed has been pursuing the policy of withdrawing liquidity from markets, in parallel with the increase in interest rates, not noticing what is happening on Wall Street, as stated in the recent press conference Powell, saying that the Bank’s forecasts as a whole has not changed despite recent events in the market, however, such indifference is not at all.
For example, we know about telephone negotiations of the Minister of Finance of the USA Stephen Mnuchin with top managers of Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley and three more top banks, to discuss the record with the 2008 market decline, which resulted in the loss of 5 trillion dollars of capitalization for the quarter.
Although banks and assured Mnuchin in their ability to cope and of a sufficient level of liquidity for lending and operations on the market, however, the decline continued further, and the situation was not critical (nobody has admitted about the risks margin-stakes), may become such in the near future.
The fall spread to the whole market, fell also the Dow Jones (-12% YTD, -19,22% of highs of October), and Nasdaq (-10,74% YTD, down 23% from the highs of the year). The collapse spread to the oil market, Brent futures fell to $50,43 per barrel for the first time since September last year.
The situation is extremely unpleasant, and it is compounded by the time factor – since the end of the year want to “catch falling knives” no (so referred to as purchases in moments of sharp downward pulses). On the contrary, the decline accelerated by deployment of algorithmic strategies and robots that use hedge funds, and according to NYSE, automated trading makes up around 80% of the turnover of the stock market.
To make predictions in the current environment is extremely difficult. An achievement level 2300 on the S&P500 will be a critical time – namely, a break above this level will mean the breakdown of a long-term uptrend in the market S&P500, formed in 2009.
Given the amount of problems that have accumulated to the end of the year – the fed tightening, a contraction of the money supply, the trade war with China, the growing conflict of trump with the fed and the government shutdown, to wait for a miracle and a sudden reversal is not necessary. In my opinion, if 2300 is broken, then the market will continue to decline to the levels of 1800 points on the S&P500.
“The international financial centre