This has been an amazing year for the markets. In spite of the world economy slowed down with some sectors effectively halted as a result of the coronavirus the SP500 is up over 2%, and the NASDAQ is up 21% year to date! On would expect both (like the DJI) to be down for the year under these conditions. However, both are down from their highs for this year.
Q3 is nearly over and analysts are starting to look toward 2021. It’s not looking good. Government mandated lockdowns and social distancing could continue until there is an effective vaccine. This will have a negative effect on the economy. Even if there is a vaccine soon don’t expect a return to normalcy soon. This means more of the same till at least 2022. Without continued government support US consumers will be under threat of mass evictions and foreclosures. Keep in mind that even with government mandated rent and mortgage forbearance missed payments still need to be repaid, and in some cases as a lump sum.
This could be why my SP500 indicators are flashing warning signs and we have seen a down trend in the markets with increased volume since the beginning of September. The NASDAQ is behaving normally, but the volume of selling is rising, which is also a cause for concern.
All in all we are in for a rocky start to Q4.
Quant For The Masses 