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Wall Street Is Still in Historical Highs, but What Does It Hide?

Updated on December 3, 2019

Wall Street and its historical highs

Well yes, the American reference markets such as the S&P 500, Dow Jones and Nasdaq are at record highs and at the moment with a promising upward trend.
But what is behind all this rise? Several factors may be determining these very important increases in Wall Street, perhaps and one of the first in which markets are being fixed, is in the possible agreement in the commercial war of First phase between the United States and China, it seems that things are on track in the negotiations, or at least this is what the officials of the two countries make us believe.
Another of the important causes that the market may be setting, are both the interest rate drops, by the Fed and the new quantitative easing, called before QE, but now they have changed the name, but not Stop being the same.
And we add another component to all these factors, and it is the Donald Trump effect, because the markets still believe it, there is a blind faith with this president and everything he says at the stroke of Twitter seems to be interpreted for the markets in a very positive way .

So far we have commented on everything positive for the markets, but there are also things that could change these points of view at any time.
And if there is finally no first phase agreement because the United States does not want to lower tariffs any more, or else the issue with Hong Kong is more entrenched, there are two possibilities that are on the table.
Another problem and no one comments is that, if the big companies of the S&P 500, Dow Jones and Nasdaq keep going up on Wall Street, but nobody talks about the small Russell 2000 companies that their index remains stagnant at 1,550 far from This is because small, low-capitalization companies are not as overflowing with money as large ones, and this in the long term can be a problem, since the distribution of capital continues to fluctuate towards the large ones but not towards the small ones.
If we enter the Gold issue, another of the main indicators that things are changing.
Even as gold markets continue to maintain an area of ​​significant resistance in the 1,450 zone, but an area that had not been reached since 2011, countries such as China and Russia continue to increase their purchases of gold, but our analysis You cannot rely on this single commodity, as you know, gold acts as an active refuge just like bonds, and as markets are acting, it gives much to reflect.

I conclude my first post on hubpages, I think there is an infinite confidence in the market rises but there are certain indicators that many times we do not take into account and that could indicate general changes in every way.
We will have to control the steps of the Fed that even though it has very good macro data and employment data much better than expected, it continues to lower rates, why? Fear or pressure from Trump? We don't know very well, but for some reason they are reactivating the cheap money machine.

Monthly graph Gold / Dollar

Monthly Chart of Gold/Usd
Monthly Chart of Gold/Usd

Russell 2000 (Small Cap)

Daily Chart of Russell 2000
Daily Chart of Russell 2000

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2019 Carles ST


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