The Market is Doing some Deep Work.
Here are some thoughts at the moment:
The market got a surprise last week and an inner bubble was burst, however the market now has to do more work, rotation, if you will, before the Macro Bubble Implodes. We will indicate when such is confirmed.
What I said recently still stands, “I doubt forecasting is relevant at this point. The FED liquidity runup, April 2020 to October 2020 was what it was. The Biden “Build back Better” balloon since is history. From here watch for an Event that creates a Buyer vacuum, Sellers will not take this market down.”
I have pointed out that the market has entered into a vacuum period. This is the time when micro market technicals have made a turn but confirmation Macro moving averages are in catchup mode.
One thing to be mindful, the huge downturn in velocity of money, decline likely due to speculative activity parking.
Looking back for me, the yo-yo period between Jun 2019 and Aug 2020 was a period when hedging analysis worked. Since then stocks have been outside my value envelope. But I now strongly see a more value oriented period evolving and say what I see.
One factor, stands out front and center in current market, an Overvalued stock market. Any number of economic effects could prick the Macro bubble, deflation, inflation, interest rates, supply, demand, the Dollar, Gold, Bitcoin, but no one knows which or which combination. No doubt Jerome and the FED, and Covid stand out as triggers,
I know the market players believe that all of this is controlled by Jerome, and that things like interest rates and value of the dollar are not determined by market forces. That belief system sustains every meltup scenario that we have seen so far, until Jerome says its over, or COVID pandemic escalates.
The backdoor COVID response belief is that the population will not tolerate aggressive curbs on activity unless things get really bad.