At around 2:40pm ET today (Tuesday) I was following the current gyrations in the “markets” with what’s been no less than an incessant melt-up fueled by press releases of pure innuendo that a “deal” (i.e., stimulus) was still possible. Both sides of the political aisle have been adroit at getting in front of a camera or microphone to spout their version of “maybe.” And the “markets” have responded like Pavlov’s dogs salivating at just the idea rather than anything substantive.
As I iterated, I was following this melt-up via my technical eye when for all intents and purposes I mused looking at the unfolding price action and said “Well, there’s no denying that, that’s a textbook breakout which opens the door for a possible retest of not just the prior highs, but setting the table for the headline: New never before seen in human history highs!”
To be thoroughly honest I was a bit taken back, for it’s been getting harder and harder to take this insanity, where the once bastion of capital formation, that was the envy of the world, would once again prove itself out to be nothing more than an adulterated, perversion of what it once was.
I mean, let’s be honest here, even these levels currently with the backdrop still unfolding of a completely smashed economy is still, in itself, a gross representation of what it once was.
However, record highs, once again, in this environment is getting to be like salt in an open wound. The reason why, for me, is that it allows for this perversion to go on indefinitely while the gutting of small business with bankruptcies and more continue at an ever faster pace.
Or said differently: Until everyone realizes that this entire facade is nothing more than a Potemkin Village constructed with nothing more than stimulus (i.e., free money) for siding, and financial pundits spinning fairy-tales that would make Walt Disney blush as the glue holding the facade aloft – nothing meaningful to truly help small businesses and entrepreneurs and the millions of people they employ will get done. Nothing. Period. And it sickens me.
So for those that are in the “The stock market is fairly priced based on solid earnings and blah blah blah…” I offer the following.
Below are two charts. The first is precisely when I was watching and about to post, offering the position that, for what it’s worth – new highs were now very possible and how repugnant I felt about it. To wit:
Then, as I say in the notation, I literally went to get a cup of coffee before I was going to sit down and write it – then this happened. Again, to wit:
That move noted by “This happened!” is what I saw when I returned to my desk from getting my coffee. I almost dropped it, but that didn’t stop my jaw from dropping, for I really was quite taken aback.
I immediately perused the web looking for the news and found out that only minutes after I left my desk it was reported that the president called for the negotiations for a “deal” were to be halted.
You can now see just how dependent these “markets” are on “Good earnings and blah, blah, blah.” Hint: They aren’t.
Without stimulus or free money via the Fed – it all falls apart. Just as I’ve been warning. The above is the first indication of how correct to heed my warnings, as to be prepared for anything between now and the election, still are.
For those that may not have caught my insinuation in the above paragraph, yes “first indication” is correct, because now it’s all about the what follows. And from a technical perspective, if this current down move is not immediately reversed. (i.e., someone of prominence with control of some very large purse strings or printing press) Then everything I’ve been warning about moves not only back from being nearly nullified, but rather…
To the head of the table. i.e., The March lows can come much sooner, and with far more scarier resolve than an abandoned roller-coaster that suddenly begins rolling down the steepest vertical on Halloween.
As always, we shall see. But today shows just how frightening this can all become in less time than it takes to get a simple cup of coffee.
© 2020 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.