SPX 2020-AUG-20

The S&P500 is finally showing some evidence that there is rational thought. This is a zoomed 4H chart, to showcase the consecutive small body candles that were on display in the lead up to breaching the previous All-Time-High. I have been clear that this is an absolutely bonkers movement. Rationally, there is no reason for the market to be at such a high point when...well...just look around.

Except: There is.

• Debt has never been cheaper
  
• Interest rates won't rise for years - Therefore keeping debt cheap; and making savings a low yield endeavor.
  
• The US dollar is in a really bad shape
  

When we factor in performance of DXY into the shape of the SPX chart - we get a surprisingly different chart. A chart that is far less linear in it's movement back to a high point. But rather one that has begun to taper off. In fact, when you account for the depreciation of USD through this period - the S&P500 is at the same point it was on 8-Jun.



And where is that point, proportionally to the drop we experienced in Feb/March? Its a 71% retrace of the movement. Fans of the Fib should certainly be pricking their ears up here...