On the backdrop of China's lowest GDP growth in last 27 years and inverse yield curve, SPX500 is about to hit all time high (SPX futures at 3012, SPX 500 ATH is 3027). It is a puzzle that how stock can keep going higher.
Do FED really need a rate cut when stocks are close to all time high or China-US trade deal on the horizon? Suddenly, FED increased it balance sheet by $210B to make it $4T which pumped lots of liquidity to the market.
Recently, APPL and MSFT reached their all time high valuation and marketcap. Both are now $1T companies.
Bond yields are dismal. Negative interest rate in US has been talked about recently.
China-US trade peace optimism have lots of question mark. Nothing is written in truce. Trump administration has history of aggrandizement. Therefore, talk trade peace should be taken as pint of salt.
Moreover, earning results have not been as soft as feared but not as great either. According to Credit Suisse analyst Jonathan Golub: in third-quarter results, SP500 companies have earnings beating by 4.7% and 77% of them topped their bottom-line expectations,
Theresa May have failed several times to pass a Brexit bill. But Boris Johnson is getting lots of attention for making a deal with EU. However, his deal is in chaos this week to get an approval from the parliament. However, investors take note of the positive outcome anyway.
Or, it is technical. Since SPX500 is third time above 3005 level. Last three time it touched 2950, it broke area of all time high to 3000 level. This time, SPX500 is third time reaching the area of 3000 level. Therefore, on the break drop of some big uncertainties, due to the technical reasons SPX500 may break ATH of 3027 this time.
Now the question is where it new ATH break down: 3030, 3040, 3050, 3100. It is million dollar question. However, to reach high ceiling, some of the above mentioned points should have very positive outcome.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
@dtrade
Cryptominer , occasional trader and tech blogger since 2013