If a picture tells a thousand words; then a current chart of the S&P 500™ is an encyclopedic representation of bizarro world. So distorted, “juiced,” and far from reality have they now become they make a bizarro world look normal in comparison.
Once I looked at the “market” close the other day I couldn’t help but think “OK Janet – where too now?” Because, the only reason we are here is in direct response to her dulcet tones as interpreted by Wall Street. Every other metric is basically in the crapper. And one of the worst metrics to be in that category: is the volume that is basically non-present.
The other day the “markets” once again hit yearly highs and , once again, are within spitting distance of never before seen in the human history of market highs.
For those not that up-to-speed when it comes to things like volume analysis, I’ll just say this: That’s not a good thing.
You want to see this type of stat during a sell off – not – a push up. Metrics such as those now being witnessed have been harbingers more often than not for quick reversals. Not always, but when they happen at key points? Your first order of business should be too: Pay attention. And if I might add: very, very close attention at that.
So with that said I can’t help but put up “The Chart.” And here it is with another notation which I feel is at once again a critical juncture. To wit:
As you can see when we left off in my last post a few weeks back – it was all about that #11 area.
As I stated then, “if it didn’t hold I felt we could see a quick ride down to that #12” where you would then start hearing real concerns once again emanating from the Fed. Remember: the reason for using the word “concern” was not for you or me; but for the Fed. For as I’ll remind you over the last 6 weeks or so the tone from the Fed. has been deemed by many in the press as “hawkish” aka “We really, really, really mean to raise rates this time.”
Yet, once again during May the Chair Ms. Yellen seemed to signal more dovish tones than her contemporaries – and Wall Street took that as “back up the truck for this level is gonna hold!” and we’ve ramped up to where we now find ourselves (once again!) where it all began.
However, like I iterated earlier – very few are buying into this rally and the “markets” are experiencing another analogy for volume-less trading price movements: aka The paper cup equivalence.
The reasoning being, much like a “paper cup,” it doesn’t take much to move it and can get blown around pretty quickly and make sudden moves out-of-the-blue with any gust or breeze. And with a volume-less “market” as we are currently in the midst of, that breeze or gust can be manufactured to order in whatever direction the front running, algorithmic, headline reading, parasitical, laser enabled, high frequency trading robots want it to go, hence – we go up, and up, and up. Until?
And that’s the $4.5 TRILLION dollar question.
As far as questions go there is also one other that is just as important. And it is this…
The first time we ever made it up to these levels we had the tailwinds of $4.5 TRILLION dollars worth of QE remnants still freshly being allocated throughout the “markets.” It only took a few months later for it’s no longer available effect which caused the “markets” to careen in vertical fashion where it took Fed. speaker after Fed. speaker taking to any and all media outlets available to say “Hey, hey, no, we’re still here don’t worry!” to cease that falling, then, enable the laser-like precision and resumption of the HFT’s to front-run and gorge any and all stop-loss orders that were presumably placed during that panic. Then – Rinse, repeat with every similar “market” move to where the “markets” find itself once again.
So the questing is: Do you feel lucky? For if you think even the pros are making “informed analytical purchases based on pure business fundamentals and acumen as opposed to – just a bet based on hope and a lot of praying with other people’s money?” I have some wonderful oceanfront property in KY you can have at a bargain discount price made available only to you. Trust me, the ocean views are just spectacular, much like the views from the heights of these “markets”.
And for those who may want a reminder on how we even got up here so fast since February when it seemed as if we were just one step away from the edge? Here’s what I said about that, then. To wit: “Maybe You’re Confused By The Fed. – But Wall Street Isn’t”
Just remember a few things when trying to take in the views from up here and they’re this: There are no windows in the casinos for two very important reasons.. One is so you don’t get distracted from the game so you can be more easily separated from your money. The other? Well, it’s to try to stop what happens on Wall St. when they not only get separated from your money – but their own as well.
© 2016 Mark St.Cyr