S&P 500: Revealing the “Real” Story About the Record High
Financial headlines do not always tell the full story
by Bob Stokes
Updated: August 25, 2020
Sometimes you have to dig a little deeper than the headline to find out what really happened.
You know, like what's suggested by the television title "True Hollywood Story," or the BBC's "Real Story."
Sometimes getting the real scoop simply satisfies one's curiosity and is more entertainment than anything else. But, at other times, digging deeper into a subject can help one draw an important conclusion that may affect one's life -- or investments.
For example, consider this August 18 Washington Post headline:
U.S. stocks hit record high, ending shortest bear market in history
That headline was referring to the S&P 500 index. Of course, it suggests that a new rip-roaring bull market may be at hand. A new investor might say, "It's time to jump into the market with both feet."
Now, look at this August 22 CNBC headline:
The S&P 500′s return to a record doesn't tell the full story with 60% of stocks still with losses
Ah, this puts a whole new twist on the index returning to a record high. Of course, it suggests that the rally is not "deep," given it's being driven by less than half of the index's components. That's important information for an investor.
Our August 21 U.S. Short Term Update dug even deeper into the behavior of the stock market:
The S&P made a new high today, but the push was attended by negative breadth and negative up/down volume. While the S&P rallied 0.34% today (11.65 points), 56% of the index's issues closed down for the day and just 44% closed up. The new high was attended by Big Board advancing volume of just 33.6% and declining volume of 66.4%. According to SentimenTrader.com, the volume measures were the worst ever for a 0.34% rally dating back to 1962.
Also, know this: That issue of the U.S. Short Term Update also shows a very revealing chart of the NASDAQ Composite and Value Line Composite indexes.
Our Chief Market Analyst, the Update's editor -- a typically reserved, seasoned market professional -- uses the word "amazing" to describe what's recently taken place in the tech-heavy NASDAQ Composite.
The Update's charts also reveal why comparing the NASDAQ Composite with the Value Line Composite at this particular juncture is important to you as an investor.
You can review this chart, plus get analysis of bonds, gold, silver, the U.S. dollar and more, risk-free for 30 days. Follow the link below to get started.
Price Pattern Analysis Vs. Most Market Opinions
Most market opinions are based on events outside the market -- "causality." In other words, many pundits believe that the news or "fundamentals" drive stock trends.
But EWI has compiled a mile-high stack of evidence that proves this is simply INCORRECT.
On the other hand, we have observed that the DJIA's price pattern repeats at all degrees of trend -- making the DJIA's NEXT move predictable!
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What can you learn when you look at the stock market -- the Dow Jones Industrial Average, specifically -- going all the way back to 1788? A lot! For one, clear Fibonacci proportions begin to emerge between multi-decade historical periods. What's more, the same Fibonacci proportions also begin to point to the year 2021 as a very important moment in financial history.
In June 2020, it seemed the natural gas bear would stay for a while. Yet early July saw a turn from its long-term low. A four-month rally followed and prices more than doubled: See the forecast that got it right.
"When empires fall, it is usually accompanied with a debauched currency," says our Head of Global Research Murray Gunn in this sobering overview as to why 2021 may usher in "a changing world order."