The stock market gained ground last week as investors refocused on the China trade war, as I pointed out in the latest Market Week show. The S&P 500 (SPX) rose by 53 points to 2979, an increase of nearly 2%.
The market faltered early in the week when the US and China enacted fresh tariffs on each others’ imports. But optimism later exploded on news that representatives would discuss a possible new round of trade negotiations in October.
S&P 500 (SPX) Daily Chart
Our approach to technical analysis uses market cycles to project price action. We feel it is first of all important to focus on the fact that momentum has flipped from bearish to bullish in the short-term. However, based on intermediate term cycles, we do not believe this will last long.
For the coming week, our analysis is for renewed pressure on the SPX, within the context of its current minor cycle shown on the chart above. The near term support zone is between 2910-2925.
Vanguard Total World Stock (NYSE:VT) Weekly Chart
Taking a step back, stocks also moved higher globally last week, with the Vanguard Total World Stock ETF (VT) also up by 2% to over $75.
Based on the market cycles, we see a similar pullback in global equities markets, with this one focused on the month of September. The cycle low at just below $71 may provide support as it did previously.
For a more detailed analysis of both of these charts, check out the latest episode of the askSlim Market Week show.