As always I’ve been fielding calls and notes from others asking me “Are you still sticking to your call?” since the “markets” continuous rally on Friday. My blunt answer has been: Yes.
Here’s the reasoning…
As much as the “markets” have rallied since the March lows when the Federal Reserve threw even more extraordinary measures at the already inept extraordinary measures it’s been stoking for months prior. In regards to what they call “market structure via technical analysis” again, said “markets” aren’t doing anything more than rallying from a deeply oversold (caused by a panic) condition fueled by extreme monetary policy (aka money printing ex nihilo) the likes the world has never before seen.
This so called “rally” seems extraordinarily powerful and unstoppable based only on the mere fact that both the sell-off, and reaction of policy measures to it, were extreme in and of themselves. However, with that said, from a sheer technical analysis viewpoint: They are doing nothing different than what takes place normally after any relatively forceful sell-off.
It is only the extreme size and scale of this latest one that is different. And this is that moment in time where everyone can get fooled. Repeat: everyone. (Need I remind you of the term “Autopilot” and what happened next, just as I said it would?)
So now with the above said for context I feel it’s only fitting to use another of those so-called “experts” that has some form of mainstream business/financial media guru/cult following when it comes to the “markets” and in particular stocks. e.g., Prof. Jeremy Siegel.
On Friday Market Watch™ (a publication I’ve also been quoted in which is why I’m highlighting it as to not show bias) ran the following headline featuring Mr. Siegel. To wit:
And there you have it. Only one of us will be correct, but the implications are enormous.
If I’m wrong? I’ll be the first to say: I couldn’t be happier.
If he is?
Those that took this as a “expert opinion” are going to be something, but it ain’t gonna be anything to do with happy.
In regards to this sudden, newly found, certainty from this segment of experts that were shocked (shocked!) weeks ago when their interpretations of higher highs into the stratosphere came crashing down. Remember: the “markets” fell apart in February before, again, sorry to repeat myself, but it’s far too important to gloss over – before anything called “Corona…” was widely known or understood.
You had others (i.e. the buzzer-banger et. al.) in March doing entire show segments touting how not to worry because “The market has it wrong” to then watch said “markets” collapse thousands upon thousands of points in free-fall. Again, remember?
If you don’t here’s what I said for those that want to know at that precise moment as said “experts” were touting all that “expertise.” The rest, as they say, is in the history books. (i.e., I was proved correct.)
However, to be fair, let’s put up two charts to show you exactly what has transpired over the past week and why I’m still arguing as to not alter my original interpretations or thesis.
First, what I highlighted prior in my ongoing commentary. To wit:
And today as to where we ended on Friday, again, to wit:
Need I say more?
As always, we shall see.
© 2020 Mark St.Cyr