On Friday the popular averages were slammed down hard after the yield curve inverted, i.e. 3-month T-bills began yielding more than 10-year T-bonds. Some fear that could be a signal of a coming recession.
Above is our 3-month chart of the S&P 500 exchange traded fund (SPY). The December market plunge occurred during dysfunction in the US government climaxing in Trump’s partial shutdown of the government when Congress did not include his southern border wall in a funding bill. However the SPY has been rising this year.
The surpassing of the SPY’s 50-day moving average on January 18 with increased trading volume was most welcome. Since February 15 the SPY has generally remained above its 200-day moving average. That had kept us optimistic, however the market’s reaction on Friday to the yield curve inversion turned our outllook arrow to a cautious yellow.
DISCLAIMER: Our commentaries are provided as general information and not investment recommendations. You are responsible for your own investment decisions. Our opinions are based on historical research and data believed to be reliable. There is no guarantee that results will be profitable. We are not responsible for errors or omissions. We may hold positions in vehicles that are mentioned.
Updated following each market day
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