US Stock Market Volatility Is Still In The Mix

US Stock Market Volatility Is Still In The Mix

$SPY

The S&P 500 dove 11% between 17 and 25 August

The S&P 500 has seen a 6% relief rally from its 24 August low, and some commentators are things are stable again, not so, because:

  1. We don’t know what the Fed’s going to do re interest rates or continuing QE, and
  2. China’s currency devaluation changed the landscape.

Until there is more clarity on those issues the market will stay defensive.

On the Fed

Many economists expected the central bank it to begin raising interest rates in September. Now some officials at the central bank say that is not a good idea, given the stock market’s volatility.

On China’s currency devaluation

China’s decision to devalue the RMB Yuan 2 weeks ago shows determination the part of its government to become a reserve currency, that may be a disruptive event.

China’s economic growth has slowed to 6%, and its stocks have entered a Bear market falling 40% since the highs on 12 June.

US economic growth is growing, it marked + 3.7% in Q-2, and Germany is solid.

That said the US market is in need of a healthy correction, it has not seen one since June 2012, this is the season for it.

HeffX-LTN Analysis for SPY:  Overall Short Intermediate Long
Bearish (-0.35) Very Bearish (-0.60) Neutral (-0.23) Neutral (-0.22)

Stay tuned…

HeffX-LTN

Paul Ebeling

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