The Tiresome Battle

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Let me state the obvious: it’s one whole hell of a lot more fun to trade a market like the one from Feb 20 through Mar 23.………

…….as opposed to this crap:

This is a pitched battle, and the sides couldn’t be more obvious. One the one side, there are:

  • Economic facts illustrating the collapse;
  • Plunging earnings and profits;
  • Massive unemployment;
  • Civil unrest;
  • Long-term bearish trends;
  • An apocalyptic amount of debt;
  • Massive geopolitical risks

And on the other hand is:

  • Jerome Powell and his ability to create trillions of dollars of “money”

Period. End of story. Choose your side.

One thing propping up spirits is crude oil, which is recovering from negative prices. USO, which has been through the Twilight Zone of finance over the past month, is rising smartly:

One heartening contrast to this is the fact that the oil and gas stocks have nailed their price gap not just once but twice. It’s a picture-perfect setup, assuming that oil doesn’t simply keep ascending and ultimately provide enough pressure for XOP to conquer this line.

To drink in this battle between the realists (Slopers) and the insane Powell worshipers, let’s take a look at the /RTY (the small cap futures).

The tinted area was, of course, the worrisome entity for me. Once prices started launching, my stomach turned, but mercifully, prices were repelled at the price point I’ve noted with two arrows.

In the early morning hours, we actually started to crack back into the cup-with-handle zone, showing the bullish breakout had failed, but them the damn Fed got into the scene again and bid prices up. So it’s an agonizing tug-of-war between Truth and Lies, and, ya know, I’d really like my bear market back, thank you very much.

A number of people have written me with the exact same question, which is, more of less: “If the Fed can print infinite trillions, how can anyone possibly use analysis to beat the market, since there is no real market anymore?”

It’s an outstanding question for which I have no answer. I would say the companion question, and these two queries make the most important bookends of our era, it is: “Why doesn’t all this debt matter?” That’s another question I simply cannot answer.

In any case, toggling between being offensive (shorting stocks and waving my hatchet wildly in the air) and defensive (squealing like a pig in retreat and frantically closing positions), the only real winner is my broker. I’d rather have a steady downtrend, if the market gods wouldn’t mind.

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