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This presentation is solely for informational purposes and not a solicitation to invest. Stonehenge Analytics offers and publishes forecasts of future likely price movements of various financial assets. These are opinions formulated from our cycles-based historical analytical research. They are not, nor are they represented to be investment advice. Individuals or institutions choosing to act on these opinions are doing so at their own risk. Stonehenge Analytics does not warrant or guarantee that acting upon its published opinions will produce financial gain. Past historical performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Individuals and institutions should consult a financial advisory professional before making any investment.Druitt’s Weekly Data ChartsWeek Ending January 24, 2020 All four major U.S. stock indices closely tracked by the Weekly Data Charts newsletter suffered weekly price declines this past week, making their January 17 weekly-close prices short-term high price inflection points, at least for the moment. The popular Dow Industrial Average fell by -358 points (-1.22%) to close at 28,989, while its companion Dow Transportation Stocks Average dropped by -219 points (-1.94%) to close at 11,059. The broad-based S&P 500 Index fell by -34.15 points (-1.03%) to close at 3,295.47 and the technology stock-heavy NASDAQ Composite Index fell by -74.03 points (-0.79%) to close at 9,314.91. For the present, the January 17 closing prices of the Dow Industrials, the S&P and the NASDAQ are simultaneously-made all-time weekly-close prices at 29,348 for the Industrial Average, at 3,329.62 for the S&P and at 9,240.88 for the NASDAQ. The January 17 closing price at 11,278 is the current 52-week weekly-close high for the Dow Transportation Average. Its all-time weekly-close price high was made on September 14, 2018 at 11,570. Simultaneously-made new 52-week and all-time weekly-close price highs and lows have historically frequently marked the end point of multi-week price advances and declines by all four major indices. Since we have only seen one week of price decline at this point we cannot be entirely certain that the January 17 prices will continue to stand as more than very short-term high price inflection points. This week’s chart package will in fact present historical evidence which comes down heavily on the side that this will more than likely turn out to be the case this time as well. The price momentum data from the NYSE and many ratios and moving averages of that data constructed and tracked each week by the Weekly Data Charts newsletter currently show no signs that a collapse by the major stock indices might be imminent. Speculations that we have read and heard in the financial media attempting to draw comparisons to the “” stock market collapse that commenced in March 2000 are extremely premature at best and just flat-out wrong at worst according to NYSE price momentum data. NYSE weekly new 52-week high and 52-week low-based data series continued to behave bullishly for the major stock indices at all but the short-term 5-week time period. The 5-week moving average of weekly new 52-week lows ceased its decline in place since the week that ended on November 22 and rose, moving up to 42 new lows from 34 on January 17, making the January 17 level a short-term low inflection point. However, the NYSE produced just 76 weekly new 52-week lows this past week, hardly a figure that indicates a massive wave if selling activity. Meanwhile, the 5-week moving average of weekly new 52-week highs continued to climb, moving up to 477 new highs from 465 one week ago. It has been rising since the week that ended on December 13.The 5-week moving average of NYSE weekly new high/new low ratios ceased its rising trend that began from the week that ended on December 6, 2019 by falling to 92.0% from 93.0% on January 17, making that date and level a short-term high inflection point. We therefore do have some evidence that on a strictly short-term basis the prevailing short-term upward price momentum that has dominated the NYSE since early December is dissipating. We do not yet have any evidence however that it has changed to downward price momentum. At all 10-week through 40-week moving average time periods the NYSE weekly new 52-week high and 52-week low-based data series continued to behave bullishly for the major stock indices. Weekly new 52-week highs rose across the board. Weekly new 52-week lows fell at all but the 40-week time period where that moving average was unchanged for a third consecutive week. Moving averages of NYSE weekly new high/new low ratios rose across the board. Only at the short-term 5-week time period was there any evidence that upward price momentum might be diminishing. This is a very flimsy basis for speculating that the U.S. market might be approaching a “” type market collapse. Among NYSE weekly “percent of stocks rising” ratio moving averages there was more persuasive evidence across all moving average time periods that upward price momentum might be approaching at least a short-term exhaustion point. The 5-week moving average continued a downward trend that began in the week of December 30-January 3 by falling to 54.28% from 58.64%. But, it remained comfortably above the critical 50.0% line. The 10-week, 20-week, 30-week and 40-week moving averages also declined this past week. But, all remained comfortably above their respective 50.0% lines. There is as yet no evidence of downward price momentum being generated at any 5-week through 40-week moving average time period. Yield spread data from the U.S. bond market also signaled that upward price pressure on stocks from the bond market had at least temporarily abated. The “Merrill Lynch Confidence Index” fell to 68.87 from 72.27 on January 17. This decline establishes the January 17 level as a short-term high inflection point at a new and higher level than the previous short-term high at 72.07 it made on December 13. But, unless and until it takes out its most recently-made low inflection point made on November 22 at 66.58 there will be no evidence that even a short-term downward trend might have been started. The Corporate Bond/Treasury Bond Yield Spread rose to +79 basis points from +73 basis points on January 17. This directional reversal did establish the January 17 level as a short-term low inflection point. But, unless and until it rises above the major intermediate-term technical resistance/support line at +85 basis points there will be no evidence that the downward trend that has prevailed since the Yield Spread “spiked” upward on August 23, 2019 to +120 basis points might have been reversed. Our long-term chart of the &P 500 Index that uses only its weekly-close prices also compares that index with both the short-term 5-week and short intermediate-term 10-week moving averages of NYSE weekly new high/new low ratios since May 2008. The S&P 500 price line on the chart has been divided by a factor of 10 for scaling purposes. S&P price levels for specific dates noted are actual, unscaled prices. We have placed a horizontal orange line on the 5-week and 10-week moving average portion of the chart at the 90.0% level primarily in reference to the short-term 5-week moving average of NYSE weekly new high/new low ratios. This is to demonstrate that S&P 500 price declines historically associated with 5-week moving average retreats downward from high inflection points made at or above 90.0% since the end of 2011 have never produced S&P price losses greater than -10.0%. All 5-week moving average high inflection pints made at or above the 90.0% line are noted on the chart. The one made just one week ago on January 17, 2020 was the tenth such high inflection point made at or above the 90.0% line since the end of 2011. Subsequent to the previous nine the largest S&P price decline was -8.9% from April 27 through June 1, 2012 (weekly-close basis). The longest duration price decline was from August 12 through November 4, 2016, but it only lowered the S&P by -4.5% (weekly-close basis). We have placed a red horizontal technical support line across four 5-week moving average low inflection points made on November 18, 2016, September 1, 2017, June 7, 2019 and August 30, 2019 all in the 56.1% to 57.7% range. S&P 500 weekly-close price declines associated with these low inflection points ranged from -2.0% to -6.55%. This set of recent historical facts makes it very clear that long-term investment-oriented accounts currently have little to fear in the way of a sudden price collapse by the S&P 500 Index. No such “crash” scenario will be possible until after the 5-week moving average of NYSE weekly new high/new low ratios has fallen below the technical support line drawn across these four low inflection points has been breached to the downside. The longer 10-week moving average of NYSE weekly new high/new low ratios has been trending upward from its most recently-made low inflection point at 66.3% made on October 11, 2019 and at the blue horizontal technical support line placed at that data point. As of today it is still rising.at 85.5%. Upcoming weekly ratios due to drop and be “replaced” in its calculation will be just 61.5% for the upcoming week of January 27-31, but will rise to an average of 80.0%/week for the February 3 to February 21 time period. Since this three-week “replacement” average is below the current 5-week moving average we currently have no reason to believe that the 10-week moving average will not continue to rise at least through February 21. Since S&P 500 intermediate-term peak high inflection points have only very rarely preceded 10-week moving average intermediate-term high inflection points it is therefore also likely that the S&P 500 intermediate-term price high inflection point still lies in the future. Any S&P price decline that might take place between today and February 21 will most likely be extremely brief in terms of time and very mild in terms of price damage. A more substantial “pullback” which might accompany a simultaneous decline by both the 5-week and 10-week moving averages of NYSE weekly new high/new low ratios and produce price damage similar to that sustained in the May 3 to May 31, 2019 “pullback” would be unlikely to breach the currently imperative S&P 500 up-trend line of rising weekly-close price lows made on May 31 and August 23, 2019. This up-trend line is currently at approximately the 3,000 price level and is rising with time. Our next chart has been displayed frequently in recent weeks. It is a “stand alone” chart of the Corporate Bond/Treasury Bond Yield Spread since March 7, 2014. The data line on the chart depicts the yield spread in basis points between the Barron’s High-Grade Corporate Bond Index yield and the 10-year Treasury note yield. The two parallel black down-trend lines on the chart are the long-term down-trend channel lines of the Corporate Bond/Treasury Bond Yield Spread which have been in place since April 2011. The most recent contact made with the lower channel line was made on February 2, 2018 at +70 basis points. This was just one week after the S&P 500 posted its then all-time weekly-close price high at 2,872 on January 26, 2018. The Yield Spread rose this past week to +79 basis points from +73 basis points on January 17, thereby establishing that date and level as at least a short to intermediate-term low inflection point. As of this moment, the associated S&P 500 weekly-close price high inflection point was also made on January 17 at 3,329. However, we cannot help but to observe that the Yield Spread has demonstrated a very powerful intermediate-term downward trend since it posted its most recent short to intermediate-term high inflection point at +120 basis points on August 23, 2019. This Yield Spread high coincided exactly in time with the S&P 500 weekly-close price low made that same Friday at 2,847. We must assume at the current time that this powerful downward trend in place since August 23 of last year is still the prevailing intermediate-term trend. In fact, unless and until the Yield Spread produces a definitive upside “breakout: through and above the dashed technical resistance line placed across three low inflection points made on June 1 and October 5, 2018 and April 19, 2019 in the +81 to +85 basis point range we will have no reason to suspect that the Yield Spread trend might be anything other than downward. Given the longstanding and consistently inverse correlation between the Corporate Bond/Treasury Bond Yield Spread trend and the S&P 500 price trend it would be extremely premature to conclude based upon a single week’s data that the Yield Spread trend had changed to rising from falling and therefore the S&P 500 price trend had changed to falling from rising. Yet, no small number of financial media self-styled pundits appeared to have done exactly that this past Friday. The Weekly Data Charts newsletter believes these people are attempting to generate a “news’ story where none currently exists. It is certainly possible that the Yield Spread trend direction could change to rising from falling at some future point in 2020, at which point forecasts of dire consequences for the U.S. major stock indices might be warranted. Readers can be confident that the Weekly Data Charts newsletter will report such trend changes as soon as they become apparent. Our final chart this week is one which we hope will put to rest any fears aroused on the part of our readers by what we consider irresponsible financial journalists and media types attempting to manufacture “news” stories where none exist. It is a comparison of three long-term 40-week, 60-week and 100-week moving averages of NYSE weekly new 52-week high/ low ratios since December 18, 2009. We wish to pay especially close attention to the behaviors of these three moving averages in 2017 and 2018 when all three posted long-term high inflection points. We wish to be particularly attentive to the amount of elapsed time passed from the dates of the peak long-term highs to the commencement of the next major and highly damaging S&P 500 multi month major intermediate-term price decline. The chart shows that the 40-week moving average of NYSE weekly new high/new low ratios posted a “double high” on December 9, 2016 and on March 10, 2017 at 82.9% and 82.5%. The second of these two highs preceded the S&P 500 all-time price high it made on January 26, 2018 from which a -9.9% (weekly-close basis) decline followed through March 23, 2018 by 46 weeks. It preceded the higher S&P 500 all-time high made on September 21, 2018 from which a more damaging -17.5% correction followed through December 21, 2018 by 80 weeks. The chart shows that the 40-week moving average is currently in the process of again posting “double-highs” at 74.2% on November 1, 2019 and this past week, January 24, 2020. But, upcoming weekly ratios due to be “replaced” in the 40-week moving average calculation will average just 67.6%/week for the next 10 weeks through Friday, April 3. This “replacement” average is well below both the current 5-week and 10-week moving averages. The 40-week moving average could continue rising for another 10 weeks to a new and higher high. The fact is that we currently do not know when and at what level the 40-week moving average will finally top out. But, from the current date an elapsed time of 46 weeks will be the week of December 7-11, 2020. Based upon the history from March 10, 2017 through September 21, 2018 the next truly damaging S&P 500 intermediate-term price decline will not commence prior to the week of December 7-11, 2020 and might not commence until the week of August 2-6, 2021. The longer 60-week moving average of NYSE weekly new high/new low ratios peaked on April 28, 2017 at 82.4%. This was 39-weeks in advance of the S&P 500 price high made on January 26, 2018 and 73-weeks in advance of the higher price high made on September 21, 2018. The chart shows that the 60-week moving average is currently still rapidly rising upward. Upcoming weekly ratios due to be “replaced” in its calculation will be extremely low ratios that will average just 35.8%/week for the next 10 weeks through Friday, April 3. It is extremely likely to continue rising through at least that date. Using the elapsed time intervals from the April 28, 2017 to September 21, 2018 time period and applying then to an assumed peak high made on April 3, 2020 produces expected S&P 500 peak price highs on December 31, 2020 and/or August 21, 2021. Note that these two projected dates for S&P 500 peak price highs are very close in time to those produced by performing the same elapsed time analyses on the 40-week moving average peak high from March 10, 2017. The longest-term 100-week moving average of NYSE weekly new high/new low ratios did not produce its highest and final high at 79.9% until January 26, 2018. This was exactly coincident with the S&P 500 all-time price high at 2,872 from which a -9.9% decline followed (weekly-close price basis) through March 23, 2018. But, it was also 34 weeks in advance of the later and higher price high made on September 21, 2018. The chart below shows that the 100-week moving average is currently still rising. We can reasonably accurately estimate that it will not reach its peak high until the extremely low weekly ratios from December 2018 finally drop out of its moving average calculation. This will not be until 100 weeks have passed from the week that ended on January 4, 2019. We know exactly when that will be. It will be in the week of November 30-December 4, 2020. The forward elapsed time analyses based upon the correlations between the peak long-term highs of the 40-week, 60-week and 100-week moving averages of NYSE weekly new high/new low ratios and the timing of the subsequent S&P 500 peak intermediate-term price highs from which major intermediate-term price corrections followed tell us for certain that there is no major S&P 500 intermediate-term peak price high from which a major correction will follow in the immediate future. In fact, it appears that the earliest we should expect such a major price high will be in December 2020. The Weekly Data Charts opinion is that all financial media reports and stories that attempt to compare the current U.S. stock market to that which immediately preceded the commencement of the “” crash in March 2000.can and should be ignored by our readers. The comparisons are not valid and not based upon sound historical comparisons and research. This week’s chart package presents very strong historical evidence that in our opinion completely discredits comparisons between today’s U.S. stock market and the”” market of early 2000 which immediately preceded the bear market which lowered the S&P 500 by -50.5% from March 2000 through October 2002. Our opinion is that these comparisons are the fantasies of financial media journalists who are desperate to manufacture a “news” item where none exists. Over the relatively short term our data does show that upward price momentum on the NYSE did show a very discernable weakening this past week. But, we have yet to detect the generation of any downward price movement. We therefore do not expect that this past week’s price declines by the major stock indices will continue for any lengthy time period.Thomas J. DruittFinancial Markets Research and AnalysisStonehenge Analytics ................
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