Maybe this post should be titled “shattered dreams” instead. Once again, the bears were seduced into a picture-perfect setup and had every bit of evidence to suggest that the market would be grinding its way lower for months, only to have the entire global asset system shocked by a couple of chest paddles. We haven’t had an honest-to-God bear market in almost two decades.
Most index charts look like the S&P 500 below: that is to say, a wedge setup, a rounded top, a failure, and then BLAMMO, the sharpest, most vicious bear-breaking rally in market history. Even at this great distance, the bull run in August looks completely out of place.
The S&P 100 has the same setup, with the index closing (as most others did) at never-seen-before vauations.
The NASDAQ had been range bound for months and months, and after it finally broke that range after all that waiting, it traversed the exact same range, bottom to top, in a matter of days. Disappointing, annoying, sickening, and maddening!! Feh!
Similarly, the NASDAQ 100 teased the bears into a frenzied delight, only to throw the gearbox so hard that the transmission almost fell out.
The fundamental problem with lifetime highs is that it’s impossible to judge just how far it is likely to go before, whatever the reason may be, the sellers start to outweigh the buyers. The semiconductor index had its channel as a price guide, but having broken it, the index went ahead and re-entered the damned thing, rendering it pretty much meaningless.
Oh, and here’s a real chart-breaker heartbreaker: the Russell 2000 looked like it was just a hair’s breadth away from completing the exact same top that it did a year earlier, both tinted in pink. Nope, Bucky! Not this time: up, up, and away!
Just about the only index in the Solar System not at lifetime highs is the Dow 30, although it did have a stupendously good Friday. One slightly interesting feature of this chart: see that trendline which the present price is approaching? That’s the top trendline of a price channel that goes back almost one hundred years. For real!
The Dow’s companion, the Transports, hasn’t had any problem making lifetime highs. It didn’t even care during the five weeks that the war was going on.
Thus, with all this happening, elevating bulls to lofty heights and burying the bears in a pauper’s graveyard, the VIX has plunged back to the teens, where the new world order seems to like it.
One can only imagine what the cause of the next spike will be – – and it always does come, doesn’t it? – – and what means they’ll use to reverse it. I gotta say, though, this recent rally looks like one in which the Fed threw trillions at the market, when in fact it did no such thing. Stocks went up for no other reason than they wanted to go up.
Although, in late-breaking news this Saturday morning, maybe the situation in Hormuz isn’t so settled after all.
