Behind all major movements in the stock market there is an irresistible force. (Jesse Livermore.)
Weekly Wrap-up, Week ended 26/8/22.
The week ended with the Central Bankers' Symposium at Jackson Hole, Wyoming. Jackson Hole is a summer and winter resort close to the picturesque Teton Mountains and the Grand Teton National Park.
Above is an image of U.S. Central Banker, Jerome Powell, apparently deep in thought framed by the Grand Teton Mountains. He gave an eight-minute address to open the Symposium on Friday morning (U.S. time) when he reitereated the U.S. Central Bank's resolve to maintain "the current pace of interest rate increases to stamp out inflation, and warned the Fed was unlikely to reverse course next year."
Nothing new in that? What did people expect him to say?
The effect? The AFR put it dramatically, "Powell’s eight-minute speech wipes $112b from richest Americans."
Yep, that's a big number. Ordinary mortals would have difficulty conceptualising such a number. It would be better to put it in percentage terms. It meant, for example, >3% off the S&P500.
But, to be meaningful, that needs to be put into context. Here goes.
SP500 Monthly.
The main turning points or Pivot Points for the SP500 over the past few years are evident in this monthly chart.
Jan/Feb 2020 led to the short, sharp bear market of Mar 2020, then the long bull market to Jan 2022.
The Hull MA13 hugs the chart very closely and turns down or up just after the Pivot Point. It does lag a little but not by much.
Another clue to major turning points is a change in the Heiken Ashi candle from bullish to bearish or vice versa. This also lags a little but not by much.
Of significance at the current time is a change of the HA candle from bearish to bullish, but the Hull MA13 hasn't moved to the upside.
So the monthly chart was signalling the possibility of an end to the current pull-back.
A closer look at action on Weekly and Daily Charts proves to be informative.
SP500 Weekly.
The Weekly Chart shows a possible Pivot Point in August, with a positive Heiken Ashi candle followed by a negative HA candle, but still no down movement in the Hull MA13.
SP500 Daily.
Here we see the final Pivot Point when the SP500 hit the 200-Day MA. Hull MA 13 turned down when SP500 turned down from the SP500
The trend is now down and likely to continue down.
SP500 has formed a Head/n/Shoulders top - most clearly seen on the Chikou Span seen on the left of the chart.
Expect the current downside move to flow through to the Weekly and Monthly Charts which are looking precarious.
I haven't looked at the ASX this week because the events on Friday in America seem to have precluded any insights I might have had about the ASX. That's not always the case. Sometimes the ASX pre-empts the U.S. But major turning points usually occur in the U.S. market.
