The unprecedented rise in stocks despite worrying earnings from the broad market could have a few explanations. Likely the reason for the "bubble" in the price of the S&P 500 is the intervention of the Fed. By looking at an SPX/GC1! chart, we can see the market with a lack of devaluation of the dollar. The market is in a converging triangle that will determine its course for the next year. My favored outcome is a current rejection of the trend line with the price of gold breaking down and pushing the market higher. Each time the SPX/GC1! price has touched the trend line, it has resulted in a parabolic upward move in the S&p 500. Thus, I am bullish in the short term for the broad market, and bearish for gold in the short term. These opinions will remain unless the price breaks through the trend line, or until it reaches the top of the forming triangle.
That's neat! What are other possible explanations and/or outcomes?
ryanabbott
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@paigegordon2020, possible alternative outcomes other than what I predict will happen could be an immediate breakdown of the trend line in the next few days which would likely lead to a crash in the broad market and an uptrend in gold. Long term, the direction of the markets depends on which way we break from the converging triangle will determine the direction of the markets for the next year or so.