August 2014

Bearish S&P500 divergence vs. Consumers

This year’s divergence between the S&P500 Consumer Discretionary Index and the main S&P500 index is a bearish signal for stocks, according to Riccardo Ronco at Aviate Global. Such a divergence also took place in 2000 and 2007 and suggests the main index is anticipating a decline in consumer activity.

S&P bull run intact but possible sell-off scenario

With the S&P500 reaching a critical stage next year testing its equilibrium fair value level, two scenarios present themselves for the longer-term outlook, explains Peter Lee at UBS. One of these will mean a huge sell-off to around 1200 before the bull run continues. He also presents evidence for the continuation of the commodities super cycle.