And in just one day, the divergences in the market are gone.
Commodities are rocketing off their lows of yesterday morning. Small caps are leading all markets higher. The lagging transports are not far behind. And the recently leading Dow is now the laggard. Defensive issues are down and speculative stocks are up big.
Aside from the margin call in commodities, why did the broad market recently pause? Did anyone believe that the FED would get conservative? Were bets hedged that the untold billions in free money would dry up?
I’ve just had a revelation as to why there is such a dire need to buy already inflated and risky assets. Because the money to buy them is free! Nothing is risky when there is no cost. It’s just like buying a million dollar house with no money down. You’ll gladly pay the mortgage while it is appreciating. But if the price drops, no worries because there is no real loss. Only the perceived loss of the unrealized gains.
In the last hour on Tuesday and through today the markets have renewed their primary trends established and cemented during the rally since September. The FED has again made the promise of free money to keep inflating because there is no “inflation” as they see it. Especially versus the deflation that continues in real estate assets. But nobody wants to talk about that any more.
Even the most perma-bearish stock trader I know has resigned himself to ZIRP, POMO and QE forever, without a bearish trade possible. Opinion is virtually unanimous. I know I’ve said this before, in November and we had a pause. But it is even more cemented after today.
I know everyone is sure that we continue our levitation act, but the vast majority of stocks have already entered a new trading range. Many dropped over the last few sessions and tested their most recent primary breakouts. Next will be a test of their recent highs.
They say how goes January goes the year. So far the stats are impressive with just four trading days to go. Just like last year but without the promise of QEIII.
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ha ha ha
i think fly is clownin u
actually Fly has been saying that $ is free for some time now … he laughs cause Scott just realized it.
QE3 til’ infinity
Yeah, I am still a newb (only 4 years exp.) and I have never seen unanimous bullish opinion like this last month or so.
Where do I get some of this free money to speculate with?
what margin rate is your shitty online broker offering you if indeud your pint sized account qualifies for margin?
Establish a bank -> get Fed money