FED and Shoulders - Massive Bear Setup in Stock Indices

OANDA:SPX500USD   S&P 500 Index
Amid depression-level unemployment, the stock market is nearing all-time highs. But how and why?


The Federal Reserve is funneling money into corporations via buying corporate bonds. Corporations then take this money and buy their own stock, hopefully netting out those who can see the writing on the wall.

The average age of a Baby Boomer is 66 - retirement time!

How do we retire a generation when the stock market is at 2000-2008 levels or lower? The FED indirectly provides the liquidity with printed dollars. Boomers will not think about putting Trump back in this November if they go into retirement without cash.

For corporations to also benefit from all this free money, do they just buy their stocks and hold? Is it not the rational choice to convert their new stock inventory to cash for themselves as a matter of survival? Will the FED be there to keep buying? Do we in fact live in a world without consequences? As a false bull wave hypnotizes the masses, those with cash to buy stocks 'since the market is going up' will provide this liquidity to corporations.

Market participants will lose faith in a market where price discovery becomes compromised. Market cycles and pandemics cannot be printed away.

When numbers come out at the end of this and subsequent quarters, when real prices rise, when stimulus checks don't make it to consumers, the bottom will inevitably fall out. It will inevitably and indirectly be the FED who bears the losses in the stock market, as opposed to the boomers. Or that's the idea anyway.

Significant buying opportunities ahead, as soon as the FED stops fiddling. That, or we see an end of public markets in the United States. When the government enables corporations to buy their own stock, risk free, with magic money, what are the big-picture implications of that?


I agree with the long-term prospect, however it is clear that the public has not yet felt the impact of this upcoming crisis. Expect SPY to go further. A real shakeout will start when Q2 earnings will be reported around late July or a narrative that will predict this catastrophic decrease in GDP. For now, I would not be surprised to see 3100, 3200.

Therefore, do not take out all your big guns until the narrative has changed. Now is an euphoric stage that everything is fine and it will all go better than ever. Wait until the reality catches up with the economic consequences +/- 2 months from now. I will post an analysis myself on this very soon.
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