Why I'm Bearish The US Economy But Bullish The S&P 500

US Macro Data

The chart below shows the last 2 years of US economic data summarized under 'soft data' which comprises of various surveys on the US economy, 'hard data' which comprises of all actual macro economic data as a whole. 'Hope' which is survey's based data on sentiment on the economy.

From mid 2017 you can see clearly all 3 categories peaked and have been making lower highs and lower lows since then, as the macro data continues to weaken further. This is a trend that has been occurring in most countries around the world. Because of this increasing trend of weak economic data overall, I've been bearish on the US economy for some time now.

This has also let me to suggest there is a high probability of a US recession occurring either in 2019 or early 2020 based on these trend. In fact if you strip out the increase in US Government spending in the last GDP quarter the US would of already reached a negative GDP print.

S&P 500 Chart = Bullish Stocks

Please note: Chart was taken from close 22nd March

Since I'm a trader as well as an investor, I have had to learn to sometimes hold an opposing view that contradicts each other when viewing charts as a trader. Taking the close of the S&P500 chart from Friday, we can see the current trend of US stocks as an index since the end of December, looks a whole lot different to the economic data chart shown on the above chart.

The current trend is moving higher with successive higher lows (green circles) with the green lines highlighting this overall strength. If you look at left side of the chart below from Oct 2018 - Dec 2018 period you can see a different weak down trend, with the market giving clues and warnings (black circles forming lower highs) for US stocks before the sharp declines in late Nov & Dec 18.

Once we broke support in Mid Dec (red circle) we saw a sharp decline for the next 2 weeks. Coming back to current trend in March 19, as a trader I have to keep a bullish stance overall even with the strong selloff we experienced on Friday 22nd March. The bullish stance will hold unless I see the S&P500 close below its most recent higher low around 2740 level. Followed by a confirmed lower high on the charts.

If this doesn't occur then as a trader I need to view any subsequent pullback in stocks, which is likely to continue this week as a healthy consolidation within an uptrend. This explains my reasoning why as a trader I'm bullish US stocks overall, while as an investor I'm bearish the US economy.

If you enjoyed this review of the US economy and the S&P 500, that was originally posted for members at Guruhaven.com, you can join the community free to receive macro news, trading ideas, education along with chart review requests on your favorite positions & trades from Crush The Market and other traders and investors. Simply visit Guruhaven using referral code: Crush19 by clicking here

If you would like to take a look at this week newsletter of some of the best posts on Guruhaven, simply Clicking Here

Disclaimer: Please note all information presented here at crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.