Politics, Maybe the Stock Market is in Play Now
Yesterday, our Macro Cycle Stock Market Indicator turned Bearish. Looking back at this indicator, for years it was bullish as the various QE’s kept the market in an upward direction. In July 2015, it turned Bearish and stayed in that position until what I call the “Hillary Wins Rally” occurred this summer and the indicator turned Bullish again. It is unusual for the indicator to change positions very often, certainly not a month and a half later. But now it is back in the mode that started in July 2015.
My guess is that the market is realizing that the risks of the market at this level when two deeply flawed candidates are beating each other up for the Presidency, is too much. In my mind, the next President is facing three big issues, 1) Putting Putin in his place, 2) Squashing a FED that has been following a flawed policy, and 3) addressing Inequality, which Sanders and Warren will put on the front burner after the Democrats get the Senate.