As much as we would like to report that the US Stock market has recently cleared the future concerns of a global economic recession as well as expanded into a new growth phase, we simply can’t make that claim give the data we are seeing from our proprietary price modeling systems. Overall, this final quarter of 2019, and early into 2020, may shape up to be a very volatile period in the global markets.
Recently, we posted a research post highlighting the price structure of the ES and TRAN charts that continue to suggest price weakness is still driving overall price rotation. The chart is very telling currently as it shows much more substantial price weakness in comparison to the ES, NQ, and YM charts. We believe the continued price strength is seen in the ES, , and YM charts is related to the continued “Capital Shift” where foreign investors are still pouring capital into the US markets believing they are the safest and most secure investments for the future.
Tran Index Weekly Chart
The divergence between our custom indicators and market analysis tools in relation to the support in the US major markets (the ES, NQ, and YM) continues to present a very interesting dynamic regarding the future expectations of true price value. Either the US major markets are overvalued in relation to price weakness shown by other factors (our custom indicators and modeling systems) or our custom indicators are undervaluing the strengths of the “capital shift” process that is taking place throughout the globe.
In our opinion, the single most important aspect of true technical analysis and price structure is that price MUST confirm a renewed upward price trend/bias before we can consider the risks of a price correction invalid. At this time,