Evolution 4.0 | S&P 500 Index Analysis

Evolution 4.0 Technical Analysis

We've had a multi-week broad market uptrend in play that seemed ready to bring us to all time new highs; the NASDAQ made it there. The most looked at of the indices by institutional investors is the S&P. If we keep an open mind, and see the data for what it is, profit taking may be in order. The S&P futures on a 15 minute chart, shows the successful completion of a Head and Shoulders up-trending Topping Pattern. While this pattern alone only gives us an increase in probity that the recent multi-week is over, combining this information with a myriad of other technical indicators spells out a story.

Additional Evolution 4.0 Analysis (Macro Level):

We would once again like to point out the sheer resiliency of not only the S&P 500 but all US domestic equity markets. As additional liquidity in the form of liquidated treasuries and other sovereign debt create a flood of capital back into the united states, the result is almost inevitable. Capital inflation. Effectively we are seeing a market being driven by capital infusion and capital abundance only. Evolution Consulting is currently studying some of the mid term effects of perpetual capital infusion in the form of liquidated treasuries, artificially low interest rates, and global QE policy. (Specifically from entities such as the BOJ and ECB, as well as the Federal Reserve system).

Statically speaking: the sheer amount of news driven stories that could create market uncertainty, haven't yet and likely will not. Nor have any effects of geopolitical stories shaken market confidence. So we once again point to the sheer resiliency of the US domestic capital markets in both a technical and a macro sense.

Based upon Evolution 4.0 Analysis (additional information coming soon), better than expected retail numbers for the holiday season combined with no rate hike in December (as per FOMC) will continue to drive US domestic equity markets higher (easily through the 18,000 level). We will be publishing more details in Wirehaus in the December edition, however based upon our analysis the announcement of intending to raise rates and then not doing so will have many more times the effect than simply having said nothing in the first place (or announcing no intention of raising rates).

We would at this point recommend long-side ETF/ETN's through the December-January period, in addition to a basked of both high end as well as discount retailers (same entry/exit time frame of December to January). Additional information coming soon on recommended retailers.