While the narrow tech led rally and tail end of a long bull market remind me of 1999 and 2000, the bond and currency markets acted quite differently back then to now. In 1999 and 2000, you had a strengthening dollar, especially against the euro, and interest rates were rising, with Fed rate hikes.
If you consider the bond and commodity markets, along with stocks, then I see a lot of similarities with 2012, with two big differences: valuations + long term psychology towards equities.
In 2012, you still had the 2008 financial crisis in the back of nearly everyone's mind, and the bull market was still only 3 years old. There was still a deep-seated skepticism towards equities and the trust in long term asset appreciation from stock investing was not there.
If you throw out the quick crash and V liftoff markets of 2011, 2018, and 2020, which weren't lasting bear markets, but more like 1987 style crashes, then you are looking at a 11+ year bull market right now. But other than that difference, you see a lot of similarities.
The setup for the current market is the February-March crash which set up the big fiscal/monetary stimulus that has rocketed the stock market to new all time highs while bond yields remain very low. The setup for 2012 was the 2011 European sovereign bond market led crash in Aug/Sep 2011 that provided the groundwork for ECB and Fed stimulus. Gold was also in a strong uptrend by the time the August 2011 crash happened, and it was still trading relatively high in 2012. And of course, much like now, you had 10 year Treasury yields trading near all time lows, and not going higher even as the stock market kept going up in early 2012.
The current stage of the rally feels similar to March/April 2012, which saw a breakout above the May 2011 highs at 1370, ultimately topping out at 1422, which was the topping phase after a 6 month rally off the October 2011 bottom. It is now more than 5 months since the March 23 low, and we got the breakout above the February highs at 3393, and if it plays out similarly to 2012, should be topping out very soon and have a down market for 2 months into a flush out low.
If you get a similar pullback in SPX as you did in 2012, which was a 10% down move, you are looking at a 350 point downmove, so if the market tops out around SPX 3520, that equates to a correction down to 3170.
Today we have the much awaited splits of AAPL and TSLA. And the market is gapping up again while the European indices try to follow the move higher only to steadily drip lower from the open. The US is going up by itself, and the overseas indices have little interest in following it higher.
Posts
14 comments:
This makes no sense. Eurostoxx and ftse looking uglier and uglier yet new s&p high.
Crazy market, uncommon moves happening. Feels liike it will be a one day 100 SPX point down day tyoe of pullback.
Now ftse pulling up the s&p lol. s&p 3555.
More then 5% up in less then a week.
I'm calling it here. My refractory recursive and object oriented programmed ol dawg machine learned algorithm indicates 318 is the top of the QQQ.
You ever read the Book of Job dawg? I really think trading is like the book of Job. In the long run there is nothing to be gained from it. Even the rich hedge fund managers make their money from fees and commish. I hope you learn to diversify. Even Jesse Livermore blew his brains out in a bathroom stall. Mans ego and greed and vanity his sense of high worth and feelings he is better than "lesser" others always gets in the way. Hope you diversify rather than try to catch that large whale. Give a man a fish you feed him for a meal, teach a man to fish he can make his own sushi. Something like that
If you don't believe there is anything to be gained from trading, why trade? Addicted ? Is it a gambling fix? Is it entertainment? Even if you lose money from trading, if you get good entertainment from it, it is worth it, as long as you aren't losing blood money.
Now if you play with blood money, yeah, there is nothing to be gained from trading and the downs will be too much for you to bear. And the ups won't make up for it because eventually the stress will make you miserable.
Not playing with blood money, although I hate losing investment money nonetheless.
Trading is like heroin. If you never tried it, you don't know what you're missing out on and you will probably be happier that way.
But if you have tried it, and are addicted, then it becomes your sole source of happiness and almost everything else becomes meaningless.
Come on dawg thats obstinate thinking. People OD on heroin.
You know thats true and your not just trading for yourself anymore. Is everything we do just for thrills and the rush? Thats (foolish) young mans thinking. Say no to drugs. Been there done that dawg
Lots of traders have killed themselves after big losses. One of the highest suicide rates of any job. Trading is hazardous to people s health.
Ol Dawg analytics may have served as a contrarian indicator near term with then 13k ndx call. However we believe the mkt is setting up for range bound trading until end of september like july. Then expect a burst to 13100 like August as 1) corona relief stimulus kicks in officially and unemployment benefits are extended. 2) the nation revolts against thug life blm movement and is tired of the double standard and overall bs as trump commands a large lead into polls and eventual victory with the help of fed up people sick of the liberal bullshit and russian interference
Once the top is in heading into election expect 10600 ndx. What a move. It will be beautiful.
The top is already in. We are heading to 10600 in October. There will be no pit stops higher. A blowoff top just happened and this is the first down day of a series of lower highs and lower lows coming up.
Well maybe. But the nasdaq is composed of the greatest money generating group of companies in the world. I mean its absolutely beautiful. As the world keeps converging and tech dominates our everyday lives it only makes sense these companies will get bigger and bigger.
There will be a downward trending market, it will be choppy, but eventually lead to a bottom in mid to late October, as fund managers reduce risk ahead of election, and then we rally to year end. Probably go to all time highs because we are in a bubble market. But before then, a correction to clear out the weak hands.
Post a Comment