We are seeing the end of 40 years of Financial system arrogance, especially the 10 years since Bernanke’s QE 2 in 2011.
So we are seeing PFE, Peak Financial Engineering, there is no other way this could have played out.
This is not going to play out like the speculators think. The Biden admin will bring back GDP based real growth investing, stock prices will be a function of the economy.
But first we will see the reset.
So, at the moment…
Any analysis that one can use has seen its graphics stretched to the limit. Here is our Fed Influence trading algo which we have shown many times since August 7th. You can see that the upper resistance line was breached in the last week but is hovering around the line as the market awaits new inputs.
And you always have the FANG influence.
On the way up since August, all the talk was about FANG stocks. Here is the FANG chart we monitor. Today it is showing some weakness as prices are going under the 50 day average line but keep in mind that the struggle to hold the market up has a lot of funny money behind it. There will be a turn here, but who knows how long it will take.
Where are the traders escaping to?
Interestingly, they are not giving up on overvalued stocks, they are going into even more stretched areas, like what I call FANG wanna-bees, stuff like ETSY, a good place to get cheap presents, but not world changing from an economic standpoint. Here is a chart of 8 of the 15 wanna bee Fangs,
Bottom line the FANG stocks and the wanna-bees are not really tech stocks, they are just symbols of runaway speculation. And in the process the stock market is camouflaging the depth of the imbalances facing the new administration.