Relief Rally is Now Overextended

Equity Relief Rally is Now Overextended The S&P 500’s “V’ shaped recovery from the December 2018 low is now topping with daily bearish trend change.  The monthly and quarterly swing highs in the fall of 2018 signal we have likely seen the 4-year cycle top for the S&P 500, while the larger 4-year cycle low is likely still approximately a year away.  TRI expects the S&P 500 can hit the 2,800+ level before rolling over and falling to the 2,100 to 2,200 level into the 2020. The Bank of Canada and Fed interest rate hiking cycle is likely over.  TRI has been warning of the risks of higher inflation are unlikely to materialize as economic headwinds mount.  Central bank capitulation implies a flat yield curve, consistent with TRI’s expectation of lower interest rates and flat yield curve. Market Trends The S&P 500 will likely have another 1 or 2 daily cycles higher into May to July 2019. The structure of current daily cycle low and subsequent price action will be important in determining the potential final upside targets and timing. Government of Canada 10-year rates topped in October 2018 marking daily, weekly, monthly and 3-year cycle tops. Bonds currently have…

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