{"id":19351,"date":"2019-10-30T08:12:20","date_gmt":"2019-10-30T08:12:20","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=19351"},"modified":"2019-10-30T08:12:20","modified_gmt":"2019-10-30T08:12:20","slug":"if-you-thought-the-sell-off-was-over","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2019\/10\/30\/if-you-thought-the-sell-off-was-over\/","title":{"rendered":"If you thought the sell-off was over"},"content":{"rendered":"<p>Flush with new money, the S&amp;P 500 broke resistance at 3030 this week to set a new high. Declining Money Flow,\u00a0 however, warns of selling pressure. Expect retracement to test the new support level at 3000. Breach would signal another test of support at the recent lows of 2830 to 2860.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-spx.png?w=525&#038;ssl=1\" alt=\"S&amp;P 500\" \/><\/p>\n<p>Selling pressure on blue chips is a lot stronger, with Money Flow on Dow Jones Industrial Average dipping below zero. Reversal below 26800 would warn of a correction.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-dow.png?w=525&#038;ssl=1\" alt=\"DJ Industrial Average\" \/><\/p>\n<p>The investment outlook remains Risk-Off, with last week&#8217;s ETF investment flows heavily weighted towards bonds.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-etf-w.png?w=525&#038;ssl=1\" alt=\"ETF Flows W\/E 25 October 2019\" \/><\/p>\n<p>Year-to-date flows reflect a similar picture, with fixed income inflows outweighing the much larger equity ETF market.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-etf-ytd.png?w=525&#038;ssl=1\" alt=\"ETF Flows YTD 25 October 2019\" \/><\/p>\n<h2>Supply &amp; Demand<\/h2>\n<p>We normally gauge whether stocks are under- or over-priced by comparing earnings to market capitalization, whether in the form of P\/E or Robert Shiller&#8217;s inflation-adjusted CAPE. But the Fed has shown that stock prices are really a function of supply and demand.<\/p>\n<p>Investment demand skyrocketed in the last decade, with QE driving down bond yields and forcing a large flow of investment funds into equities, searching for yield. The chart below shows estimated <span id=\"lblDataSource\">market value of publicly-held equity of U.S. domestic (financial and non-financial) corporations and the market value of closely-held equity.<\/span><\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-marketcap.png?w=525&#038;ssl=1\" alt=\"Stock Market Capitalization\" \/><\/p>\n<p>Supply of equities in the same period experienced limited growth because of three related factors. First, GDP growth slowed (partly because of QE). Corporate profit growth then slowed as a result. That left management little option. With limited investment opportunities, they returned capital to investors by way of stock buybacks. That restricted the supply of new equities for investment while demand was soaring.<\/p>\n<p>The result was an inevitable surge in prices relative to earnings.<\/p>\n<p>The chart below compares market cap (above) to corporate profits before tax. I have circled 1987 for comparison.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-10-29-mcap-profits.png?w=525&#038;ssl=1\" alt=\"Market Cap\/Corporate Profits Before Tax\" \/><\/p>\n<p>We remain cautious. Stocks are highly-priced compared to earnings.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Flush with new money, the S&amp;P 500 broke resistance at 3030 this week to set a new high. Declining Money Flow,\u00a0 however, warns of selling pressure. Expect retracement to test the new support level at 3000. Breach would signal another test of support at the recent lows of 2830 to 2860. Selling pressure on blue &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2019\/10\/30\/if-you-thought-the-sell-off-was-over\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;If you thought the sell-off was over&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,3761,57,34],"tags":[830,1113,4153,3010,3253],"class_list":["post-19351","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","category-gdp-and-activity","category-stock-markets","category-us-canada-countries-regions","tag-corporate-earnings","tag-dow-jones-industrial-average","tag-etf-net-inflows","tag-sp-500","tag-stock-market-capitalization"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>If you thought the sell-off was over - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If you thought the sell-off was over - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Flush with new money, the S&amp;P 500 broke resistance at 3030 this week to set a new high. Declining Money Flow,\u00a0 however, warns of selling pressure. Expect retracement to test the new support level at 3000. Breach would signal another test of support at the recent lows of 2830 to 2860. Selling pressure on blue &hellip; Continue reading &quot;If you thought the sell-off was over&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/thepatientinvestor.com\/index.php\/2019\/10\/30\/if-you-thought-the-sell-off-was-over\/\" \/>\n<meta property=\"og:site_name\" content=\"the patient investor\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/profile.php?id=61572934660810\" \/>\n<meta property=\"article:author\" content=\"https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/\" \/>\n<meta property=\"article:published_time\" content=\"2019-10-30T08:12:20+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/static.incrediblecharts.com\/images\/2018\/2019-10-29-spx.png\" \/>\n<meta name=\"author\" content=\"Colin Twiggs\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Colin Twiggs\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/\"},\"author\":{\"name\":\"Colin Twiggs\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#\\\/schema\\\/person\\\/d42b18d516a80149d739845749ac6454\"},\"headline\":\"If you thought the sell-off was over\",\"datePublished\":\"2019-10-30T08:12:20+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/\"},\"wordCount\":311,\"publisher\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.incrediblecharts.com\\\/images\\\/2018\\\/2019-10-29-spx.png\",\"keywords\":[\"corporate earnings\",\"Dow Jones Industrial Average\",\"ETF net inflows\",\"S&amp;P 500\",\"stock market capitalization\"],\"articleSection\":[\"Banks &amp; Interest Rates\",\"GDP and Activity\",\"Stock Markets\",\"US &amp; Canada\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/\",\"name\":\"If you thought the sell-off was over - the patient investor\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.incrediblecharts.com\\\/images\\\/2018\\\/2019-10-29-spx.png\",\"datePublished\":\"2019-10-30T08:12:20+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.incrediblecharts.com\\\/images\\\/2018\\\/2019-10-29-spx.png\",\"contentUrl\":\"https:\\\/\\\/www.incrediblecharts.com\\\/images\\\/2018\\\/2019-10-29-spx.png\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2019\\\/10\\\/30\\\/if-you-thought-the-sell-off-was-over\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/thepatientinvestor.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"If you thought the sell-off was over\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/\",\"name\":\"The Patient Investor\",\"description\":\"Smart. 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He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008\\\/2009 and 2020 bear markets well ahead of actual events. 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He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008\/2009 and 2020 bear markets well ahead of actual events. He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.","sameAs":["https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/","https:\/\/www.instagram.com\/colin_thepatientinvestor","https:\/\/au.linkedin.com\/in\/colintwiggs"],"url":"https:\/\/thepatientinvestor.com\/index.php\/author\/investor\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9tQ4n-527","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":61320,"url":"https:\/\/thepatientinvestor.com\/index.php\/2025\/03\/05\/sp-and-dow-threaten-a-bear-market\/","url_meta":{"origin":19351,"position":0},"title":"S&#038;P and Dow threaten a bear market","author":"Colin Twiggs","date":"March 5, 2025","format":false,"excerpt":"The S&P 500 is testing primary support at 5750, shown on the weekly chart below. A breach would signal a primary downtrend. The Dow Jones Industrial Average is similarly headed for a test of primary support at 42K. The Transportation Index is already in a primary downtrend signaled by breach\u2026","rel":"","context":"In &quot;GDP and Activity&quot;","block_context":{"text":"GDP and Activity","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/gdp-and-activity\/"},"img":{"alt_text":"S&P 500","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2025\/2025-03-04-spx.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2025\/2025-03-04-spx.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2025\/2025-03-04-spx.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":14231,"url":"https:\/\/thepatientinvestor.com\/index.php\/2016\/09\/24\/dow-selling-pressure\/","url_meta":{"origin":19351,"position":1},"title":"Dow selling pressure","author":"ColinTwiggs","date":"September 24, 2016","format":false,"excerpt":"The S&P 500 is retracing for a test of short-term support at 2150. Respect of the rising trendline would signal a test of 2200. Breakout above 2200 would complete an inverted scallop (or fish hook) with a target of 2400*. Declining Twiggs Money Flow, however, warns of selling pressure. Breach\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8424,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/09\/15\/dow-sp-500-selling-pressure-but-vix-bullish\/","url_meta":{"origin":19351,"position":2},"title":"Dow, S&#038;P 500 selling pressure but VIX bullish","author":"ColinTwiggs","date":"September 15, 2013","format":false,"excerpt":"Dow Jones Industrial Average put in a strong blue candle last week, but 13-week Twiggs Money Flow bearish divergence\u00a0 continues to warn of a reversal. Exercise caution until there is a breakout above the August high of 37% on TMF following an index breakout above 15660. Failure of primary support\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":11115,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/10\/14\/us-stocks-broad-selling-pressure\/","url_meta":{"origin":19351,"position":3},"title":"US stocks: Broad selling pressure","author":"ColinTwiggs","date":"October 14, 2014","format":false,"excerpt":"The S&P 500 broke through support at 1900, offering a target of 1800*. Decline of 21-day Twiggs Money Flow below zero warns of medium-term selling pressure. Recovery above 1910 is unlikely at present, but would suggest a bear trap. * Target calculation: 1900 - ( 2000 - 1900 ) =\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"S&P 500","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-10-14-spx.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-10-14-spx.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-10-14-spx.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":1086,"url":"https:\/\/thepatientinvestor.com\/index.php\/2011\/10\/03\/dow-threatens-decline-to-10000\/","url_meta":{"origin":19351,"position":4},"title":"Dow threatens decline to 10000","author":"ColinTwiggs","date":"October 3, 2011","format":false,"excerpt":"Dow Jones Industrial Average is testing the band of support between 10600 and 10800. An up-tick in volume indicates some buying support but this appears insufficient to withstand downward pressure. Failure of support at 10600 is likely and would signal a primary decline to 10000*. * Target calculation: 11000 -\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8401,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/09\/09\/dow-warns-of-reversal-but-sp-500-hesitates\/","url_meta":{"origin":19351,"position":5},"title":"Dow warns of reversal but S&#038;P 500 hesitates","author":"ColinTwiggs","date":"September 9, 2013","format":false,"excerpt":"Dow Jones Industrial Average bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Failure of primary support at 14500\/14600 would confirm. Recovery above 15000 would defer the test of primary support, but strong selling pressure should not be ignored. Friday's long-legged doji candle on the S&P 500 (daily\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/19351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=19351"}],"version-history":[{"count":1,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/19351\/revisions"}],"predecessor-version":[{"id":19352,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/19351\/revisions\/19352"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=19351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=19351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=19351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}