Waiting to roll off the Cliff
One would probably do well to move totally into the psychology side analysis of the market at this point. It is rather amazing that traders and investors with all the clues being thrown out since August 7th, have not run out of the market by this time. What are they waiting for, the train?
So let’s review all of this a bit, maybe starting with Trump and his awkward vocal attempt to try and become a dictator, he actually believes the stuff that rolls off his lips, and maybe more amazing are the people who follow him.
So this is not an environment to be holding overvalued paper assets. The big Macro picture includes the major changes that are evolving in demographics and the fact that Trump refuses to admit the Old Normal is over and it is time to redeploy employment and how the economy works.
First, Demographics and P/E’s
Here is a comment today from Bloomberg’s John Authers:
Demographic shifts on this scale will have an impact on markets, but how exactly? In a post for the CFA Institute entitled Ageing and Equities: Selling Stocks for the Long Term, Nicolas Rabener suggests that a rising proportion of retired people will mean more people selling equities. Meanwhile, there is a perceptible relationship over time between equity multiples and the proportion of working age people in the population compared to the retired.
The Stimulus Bill
So at the moment the market is waiting for the Congressional Stimulus Package. Something will pass, but one thing is important on this so-called Stimulus package, it is miss-named, it is not stimulus, it is a rescue. Anyway the waiting for the bill provides a little day trading bounciness, have fun.
Updated Macro Fed Influence Chart
Here is the picture this morning.
Short Term Market Direction
At the moment the amount of time it has taken for the market to breakdown means we are lowering our short term support levels to 2770 on the S&P and 8970 on the NASDAQ 100.