I want to highlight just two charts this morning.
The first having to do with the question you hear a lot this time of the year. Will the S&P 500 (SPX) make new highs in 2015? The index is back to its pre-breakdown level from late August, with obvious technical resistance at 2100:
The 11% rally off of the Sept 29th lows appears to have run out of a little steam right where it should have. A break of the 2015 lows, in 2015 is very unlikely with limited trading over the next two months into the holidays. I would be fairly surprised if the SPX made a new high. Although it’s only 3% away, I see the Dec FOMC meeting keeping a lid on things.
While the SPX has held its uptrend like a boss, an inability to make a new high soon could set up for a re-test of the Aug 24th lows. If the third time is a charm, there is no real support until 1600. But that will be a 2016 thing:
The second chart to look at is the Shanghai Composite. It’s fairly conspicuously seen volatility deflate since the August lows, with the index consolidating between 3000 and 3500. This is with the backdrop on continued monetary easing. Is this the largest ponzi scheme the world has even seen?:
I stand by my view from the Summer that a break of 3000 would likely see the index round-trip its entire one year move and I suspect uncontrollable downward equity volatility in Shanghai will once again seep into other risk assets that have also settled of late. But this will also be 2016 thing. The VIX closed near 15 on Friday and the futures in December are around 17 so no one seems to be expecting fireworks over the next month or so. But as we saw in August, when US markets finally take notice of what’s going on in Asia, volatility happens fast.