Where to begin? In my history of learning, reading, trading, analyzing, I have never seen a market more manipulated and completely disconnected not only from the economy, but reality.
We have come to a time in our society where economic data no longer has ANY impact on equities. We witness the week of Feb 7th till today, Feb 16th a release of horrible economic news. Let's go through it shall we?
Worse Than Expected CPI
Far Worse Than Expected Consumer Sentiment.
Worse Than Expected PPI
Q1 GDP Estimates Now 0.1% or Contraction
7 in 10 Americans Live Paycheck to Paycheck
Home Builder Confidence Falls
Personal Credit/Debt New Records
What we are witnessing is the QE going to corporations through corporate bond buying, in turn we saw the greatest massing of corporate buy backs thus pushing stocks higher and higher. Most companies are trading well over 20x earnings. It's a bubble of idiocy and greed.
The issue is simple, scary, and unavoidable at this point. All of this printing has caused probably the worst inflation in US history. The money printer's solution is raising rates, tapering, and shrinking balance sheet, which will prick this equities bubble. The response to a bear market will be.... guess what? More QE, slashing rates but this time, it'll be game over. The USD will have finally met its end as it's de-pegged as the world reserve currency. It won't matter because as the US is facing its currency crisis, other nations will face their own fiat crisis.
Whatever way you cut it, whatever action they take, there will be hurt and at least a recession plus stock market collapse like we've never seen.
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Update: Today the Dow is rallying over 700 points due to the worsening crisis in Ukraine and worse than expected PCE Data of 2/25. Bad news is great news for equities apparently. I feel like big money is moving their funds for a major event or stock market move very soon.
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It seems like no matter how good charts get, it is almost impossible to predict movements when the stock market no longer takes account economic data, geopolitical events. The market has become so unpredictable now that the Fed Market Makers and PPT move the markets as they wish. The movements are all fake without base or cause. This market is disconnected from reality altogether. According to a very well educated economist Harry Dent, we may see the Fed push markets to a new ATH before the actual collapse comes.
Hi - I REALLY can't see the FED (well I can, but I'm just saying) pushing this up from here to new ATH's - 37k....why, what for - to delay the so-called crash 'everyone' is talking about. The RSI IS SHOWING downward movement, the MACD has done the same (and many other indicators) turning downward - why would the FED push it back up, IF there is going to be a 'crash' - I agree markets are completely disconnected from reality, should not be anywhere near these levels - people can say & tell me what they like, but having traded now (daily) for the past 14 years, I have never been more confused & uncertain about making a trade.....charts are completely ignored, and if you (anyone) say otherwise you should not be a millionaire but a billionaire if you trading on charts/technicals - anyway that's my rant :) for the day. Thanks for sharing. cheers - fyi I'm SHORTING and looking for a reasonable drop today.
WorldEconomics
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@Laurent10, - The Fed can't, but they might. The reason they can't is because they know what more QE will bring: hyper-inflation. There is no scenario that the Fed takes that isn't going to cause a significant recession and economic pain.
Nickquick7
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Love this. I’ve been same way for a while now. Can’t wait for this nonsense to burst and completely tank. I’ll be scooping up equities much lower months from now.
WorldEconomics
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@Nickquick7, - More nonsense today. Dow +700 based on worsening Russia conflict with Ukraine... and worse than expected PCE.
Nickquick7
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@WorldEconomics the rally was lead by short covering. Bull trap. Just the tip of the iceberg this markets going to take a huge plummet in the coming months. And if Russia drops a nuke forget it it’s all over. We’ll be sent back to the 1980s
@WorldEconomics, Q3/4 is more typical of market tops. Summer tends to be strong into highs, historically. We most often top end or start of year.
WorldEconomics
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@holeyprofit, - That's not taking into account QE which is the biggest player in equities market movement. Without QE, the markets can't hold up all this overvalued weight.