Who would have thought ?

A year ago, that a new virus or a game stock would be the two major disruptive factors.

So everyone is concerned about the volatility that is being seen this week and wanting some part of government to fix things.

Obviously the SEC can do something about all the speculation. but will it have the have the guts to dig into the core issue, like the need to tie stock margin rates requirements to some formula based on the level of FED funny money. Starting with QE2 in 2011 the FED has taught generations of traders that stocks always go up, ignore risk.

In effect, the Pandemic has unleashed to the masses what all traders have been observing and using in trading the past 9 years.

And if we are going to try and educate the millennials, the first step would be to teach that both the long and short side of the markets are needed to find value. That is why commodities and options markets work, they are two sided, both people buying action and protection. Stock investors have been operating for years with little to force them to face reality.

Today’s market:

This week would appear to be the end of the euphoria trade in stocks based on the reflation trade and speculative support. The GDP numbers issued by the FED show that things are not so giddy. At these valuation levels, we are not looking at a 10 % sell off. Much more, but still waiting for the trap door to open.

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