Our marketplace has become something other than the usual marketplace. It has become the “Welfare State Market”.
For every issue and problem there is a “Policy Response” that is designed to deal with it. Usually it is simply the creation of more capital to give to the Primary Dealers to speculate with or to buy Sovereign Debt or to buy some kind of failed investment product like Mortgage Backed Securities. Stock investors and traders see that action and they “feel” that the Powers That Be won’t let the ship go down. But the ship has already sunk, we just don’t know it yet because prices are where they are.
The entire edifice of market prices are designed to get you to believe that the intervention and support is real. It is only as real as we allow it to be in terms of price. That is usually how Bear Market rallies work, but this is something much different. This is a situation where asset values are worth only some percentage of what prices are being reported as, but nobody wants to admit to reality.
You can talk about fundamentals or psychology of investors and attempt to justify what markets are doing in the light of the ever present Wall Street Complex, but eventually one set of facts that represents reality–and not price–must eventually be dealt with. Is today the beginning of that day? Almost certainly. And just in time for the Holiday Season.
But the record-setting October run was created in a “G-20 Policy Lab” and had zero bearing to the reality of the world today. But that pesky “buy the dip” or “buy the rumor” reality of market action and price had most everyone only believing one set of facts. That cushion will allow our markets to deal with a series of problems that has been present for months and years, but masked by “policy response”.
The markets eventually prove themselves to be bigger than almost anything that can be invented to manipulate it. At some point, even free money won’t work any longer. Keep your guard up and see you at SPX 1170, the important midpoint area of our yearlong trading range.
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Well said, but I have to admit, I see no significance in SPX 1170. 100 points off the lows. 200 off the highs. Smack in the middle of our previous range.
We might be there tomorrow. Any further insight into such a level?
OEW Daily Recap in the same camp:
“For the past week, since SPX 1263, this market has turned from impulsive to choppy. The uptrend from SPX 1075 to 1293 may have concluded. Should the SPX break below the recent 1215 low, which is the bottom end of the 1222 pivot, this is likely the situation. If the uptrend is indeed over, (it was impulsive), we may just have a correction to around the 1150 level. Then the Central Banks may get involved again in the government bond markets. If they do not, we may head back to the October lows, if not lower. Short term support is at the OEW 1222, 1187 and 1176 pivots. Short term resistance is at the 1240 and 1261 pivots.”
It seems as though the EUR.USD pair leads the US markets. Would you agree and be able to offer any insight?
Coach, As one trader told me in 2009. Currency Trading is the Big Dog and global indices are only the tail. I follow the eur/usd cuz it is the largest currency pair traded. But all the pairs must be watched..along with the global bond markets of course.
Agree on 1170.
You were right all along, I even agreed with you all along (at least since around September or so), yet I somehow still got burned and magically am not positioned to profit from this mayhem but positioned to do the opposite.
AUD/USA is almost exact chart of the S&P 500 and runs with it ..sometimes leads/ sometimes follows by a few pips/ticks.
use it with the dollar index to see the invert of the S&P helps make trading decisions to see charts differently..all dislexic to a degree of stress in the moment
U.S. Stock prices go up with Fed generated inflation.
Scott, BEST post ever. nuff said.
the market will trade between 1170-1270 for the next 100 years