It’s All So Bad That it’s Utterly Fantastic !
I absolutely love how analysis follows price in our current market environment. As long as prices rise, it can be justified, one way or the other regardless of facts.
All year the European banking system has been teetering on disaster. Yet only the organization of long-range solution in early June was enough to put most everything in working order–and send markets higher.
All year most companies reported some type of earnings or revenue disappointment. Since early June the forecasts have become weaker and weaker for both the economy and corporate earnings. Plus, one of the first and foremost computerized trading firms blew the fuck up.
But throughout it all, the “hope for more stimulus” has commodities, materials and most “important” stocks trending higher.
In fact, since June 4th, it became obvious to economists and market participants alike that the summer slowdown may extend through the year. Yet the major averages have enjoyed a picture perfect, textbook uptrend that is testing yearly highs.
Any and all selling is countered by a bid under the market that seems a mile wide (and not so deep as volume is sickly). So WTF is going on?
The 2011 Playbook is out the window. Remember, this time last year the markets had already spiked and sold off sharply. Now we are back to the 2010 Playbook as everyone has bought (Tepper’d) in anticipation of Bernanke’s Jackson Hole speech where he is expected to add more stimulus to a weakening economy. Never mind that the market had done more for him in anticipation that he could do with “real” digi-money!
Look, you are told that the market has been abandoned by individual investors. That is not true as they are buying each and every month through their 401k’s whether they like it or not. And the Algo programs are set to buy. Exactly why, I cannot say. But it is certain that “buy” comes before “sell”.
It is the final countdown to a Presidential election and investors have their hope way up. It is obvious to me that policy makers are hard at work manipulating “whatever it takes” in order to reinforce the market’s bid. After all, the stock market is their last policy tool.
And many say that the market is “dead meat” when good news finally comes. Guess what? That will be aproximately in the year 2020.