Overvalued Market

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News Buzz

• Any way you look at it, the stock market is dangerously overvalued – MarketWatch.com.

• Oil prices rise on news of Libyan halt to output and exports.

• Dow closes at record high; Nasdaq falls as tech stocks slump.

• Tech sags as chips crumble ahead of NVDA results.

• Low-income consumers are still struggling, but cracks are showing up among high-income ones, too.

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SPX - TA

• A “Hanging Man” candlestick pattern is forming on the monthly SPX chart. A small body and long wick characterize it.

• This candlestick pattern is considered bearish after mature uptrends.

• This is not an ST timing signal but an LT warning signal.

• Notice negative RSI divergence between late 2021 and the most recent peak. This indicates a loss of LT momentum in SPX.

Follow BraVoCycles on X

• Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters. You are missing a lot if you read the free newsletter and do not follow me on X. The free newsletter and my X channel go like “a hand in glove.” Yesterday, I reposted the Buffet’s Indicator chart, which is even more relevant now.

  • SPX is now about 7-8% higher than the chart's March peak.

  • No wonder Buffet is selling his long positions.

  • Keep in mind this chart describes an LT overvaluation. It does not say what is going to happen next day or next week.

Market Summary

As of close on 26 August 2024

What Has Been

• As I mentioned in the last report, the FED’s Day gains are typically reversed the next day, and most US indexes were down.

• Asia was mixed, Europe red, and the US primarily red.

• Dow advanced 65.44 points or 0.16% to 41,240.52. 

• S&P 500 declined 17.77 points or -0.32% to 5,616.84. 

• Nasdaq declined 152.03 points or -0.85% to 17,725.76. 

• Russell 2000 declined 0.78 of a point or -0.04% to 2,217.92.

What’s Next

• I wish I could predict what's next with more certainty. There are still plenty of contradictory bullish and bearish indications.

• It is not a question of new highs or not. As we pointed out a week ago, that question is largely academic, as SPX and DJI are already so close to July’s high.

• The question is whether the market will reverse soon or go noticeably higher in September.

• On balance, there are more shorter-term bullish than bearish signals, but I do not like to bet when everything is not sending the same message.

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