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I realize that record high after record high suggests – – logically – – that the future will be nothing more than more record highs – – I would at least like to be the voice crying in the wilderness and offer to you a series of broad stock indexes from Wilshire. These aren’t just the freakin’ FAANG stocks. This is the broad market. Just examine and understand that not everything is Apple:
It has been discouraging, to say the least. The small caps have exploded 8% higher since Friday based on………..what?………the promise of yet another miracle cure? Covid ain’t the problem, folks. The economy is rotten to the core, but self-delusion is as popular as disco was in 1977. This is mass hypnosis gone berserk.
One thing I try to stress in these posts is that the movement of the market can, to a significant extent, be broken down into a series of inflection points and, depending on the outcomes at those inflection points, the market moves to the next inflection point or screen.
Last week there was a very nicely formed inflection point and the decision at that inflection point was made on Friday, with a smaller bull flag channel ultimately breaking up with a target at a retest of the short term high at 3184.15, and a larger bull flag channel also breaking up with a target at a retest of the June high at 3233.13. Both targets have now been reached, with the high today on SPX at a marginal higher high at 3235.32.
Was this good news for bulls? Well not necessarily no, as my bear scenario had a decline ideally into the 2880 area before a likely retest of the June high to set up a possible double top for this move up since the March low. As that retest has been done now instead, that possible double top has been set up earlier and SPX has arrived at this next inflection point.
(more…)I was reading a very interesting article yesterday on the progress of COVID-19 and it was interesting not so much because of what was said, as for the decent quality numbers that it was quoting on COVID-19 exposures in the US population, and the fatality rate from the now decently sized statistical sample of exposed population and consequent deaths. In summary about 5% to 8% of the US population has now been exposed and are showing antibodies, and the death rate so far, subject to some likely attribution of deaths to other causes, is coming through at between 0.49% to 0.78% of those exposed. If you’d like to see the source article you can see that here.
If you haven’t seen it before I’ll be referring back to my 20th March post ‘A Short History Of Superflu Pandemics‘ and so I’m linking back to that for reference.
(more…)I was asked an interesting question yesterday in our monthly free public Chart Chat at theartofchart.net, and I’d like to talk a bit about that before I start looking at markets today. The question was whether, given that market prices reflect everything that is currently known at the moment about that market, then how can that price be mistaken? My reply was that if that was truly the case then the price of tulips in January 1637 (just before that bubble burst) would have been equally justifiable and that, further, if that was really true there would be no speculative bubbles, which clearly there are on a regular basis.
Something I didn’t add, and should have, is that while statements like this are often thought of as economic rules or even laws, what they are in truth is just working assumptions that contain enough truth that economic models can be built using them that will have some relevance in modelling the behavior of a market that is infinitely more complex than that model.
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