Market Pulse

Published 27th August 2019

The market probably topped within an irregular B-wave in late July. The most recent drop comes on the back of terminal technical patterns and elevated retail investor sentiment. More short-term weakness is likely during the next few weeks.

The macro climate turns cold as the hot potato has been passed on to small retail investors. Major assets that are linked to risk inclination approach significant supports. Meanwhile, household investors showed elevated complacency most recently. Any domino dropping at this point will probably spill over to other markets.

The situation should not be confused with the famous wall of worry. We’ve left it behind us at the end of the longest expansion in US economic history. The technical picture around European and Japanese banks as well as the Yuan, Yen and S&P 500 etc. have to be taken into consideration at this junction. All of these assets trade near crucial long-term supports. A sustainable break below the 25,250-25,400 cluster sends the Dow tumbling towards 24,000 points. The current bounce is probably a second wave of minute degree, which could fade around 26,100 points.

We remain with our assessment that the journey will continue towards the December 2018 lows as part of the broad-based weakness in global markets.

The analysis above is a historical abstract of our DJIA Premium Analysis. Subscribers can access multiple timeframes, which are not displayed on this page.