Q3 2018 Ends On A High Note For U.S. Equities

Each of the last candles on all three timeframes for the S&P 500 closed higher than its prior time-period candle.

The most notable feature of the Yearly chart, in particular, is that price could, in fact, reach a resistance target of 3033 (as I described in my post of August 6th) by the end of this year. Such a price level would end up producing a candle range for 2018 on the Yearly timeframe that equals or slightly exceeds the candle range of each of the prior two years. It would also complete a very bullish cycle for this year.

Fourth Quarter Forecasts for Dollar, Euro, Oil, Equities, and More

The third quarter is now in the books, and the revival of market volatility and uncertainty around key thematic influences carries over into the fourth quarter of 2018. With fundamental issues around US-led trade wars, Brexit, the Italian government, Turkey, emerging market contagion, among others lingering, the final three months of the year should produce opportunities across asset classes.

See all of the from the Quarterly Forecasts to the Top Trading Opportunities, How to Trade Event Risk, Building Confidence in Trading and so much more.

Equities Q4 Forecast: Global Stocks’ Strength Masks Vulnerabilities

Global share prices accelerated upward in the third quarter, building on the rebound started in the preceding three months. The benchmark MSCI World stock index is on pace to add 5-6 percent for the period. That such performance can be had against a backdrop of a deepening trade war between the US and China as well as increasing emerging market instability is almost improbably impressive. One might conclude perseverance against such odds speaks to hearty underlying strength, making continuation likely. Still, critical vulnerabilities are much too glaring to ignore; the global economy has decelerated in 2018.

After The Fall: How Significant Is The EM Equities Discount?

Following the recent emerging markets weakness, driven by dollar strength, tighter financial conditions in the US and, in some cases, domestic politics, market watchers are looking at EM assets again.

The chart below shows that FTSE EM equities have moved to a c.21% PE ratio discount to FTSE World equities (dark blue line). In P/E terms, FTSE World equities are trading at 15.5x earnings and EM equities at 12.2x.

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