The recent bounce in the US equity markets looks like it may have just been a brief pause before they head a lot lower.
Here’s why.
The headline indexes are almost useless for detecting anything in at this point because they are so heavily dominated by just a few companies.
So, as usual, we have to go in search of clues elsewhere besides the headlines.
My favorite place to look first is at the financial stocks
In the US, one main ETF that tracks a wide variety of banks has the ticker symbol BKX. It fell pretty far in October, and then had a reasonable but ultimately failed bounce-back towards its 50 day moving average (DMA):
This, too, is a headline index; so we have to go hunting within and around it to get even better clues.
One of the “ground zero” stocks to track is Goldman Sachs, as that firm is the main muscle that conducts the darker policy aims of the US empire.
On Friday of last week, it saw panicked GMTFO selling action, especially at the close:
Monster volume came in at the close, an indicator that traders really wanted out of that position before the weekend. It’s always good to keep a close eye on GS because that firm is tightlly wedded to the US government. If GS is headed down, something big is going on.
Today (Monday, Nov 12, 2018) GS is headed down even farther, and is set to make a new low for 2018. That alone is worth our full attention.
Secondarily, I'm observing real trouble across the major insurers, especially AIG, which has been a reliable bellwether for looming financial storms in the past:
AIG was stuck in a very tight trading range for most of 2018.
