Poll: When Does Support Break?
- Dude, this is it.
- Sorry bears, It’s a permanently low bottom.
- First quarter of 2019
- Hold your horses, later in 2019
Mike “Mish” Shedlock
S&P 500: How Long Can This Go On?
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Mish
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Trump isn’t going anywhere. You liberals will have to continue your tantrum.
If it gets worse, then it wont surprise me. Infact, if someone is to happen then its likely in 2019 because they will want a good economy for 2020 election. Why so much air being let out of so many markets at the same time? 1) Fed raising interest rates 2) Trade Treaties being renegotiated. Trade war with China. Less Chinese money being invested in foreign markets which is crashing Australian, Canadian and US markets. 3) EU is bankrupt. It cant afford migrants and social programs for an aging population. 4) Technology shifts are changing economy. Its not just Amazon killing bricks and morter stores but electric cars killing gas powered sedans. There are other technology shifts changing the employment market.
The bottom will fall out by next spring and Trump will resign from office. The market will love the uncertainty of a Pence-Pelosi white house for 18 months.
Nah. I do not see Trump resigning no matter what happens. He is as tenacious as a Gila Monster. The MSM are the ones praying for his resignation. I cannot see him giving them that satisfaction, even if the House manages to impeach him.
I pick door number 4. Fed hikes and adds dovish language to forecast. Market bounces. Nobody big has blown up spectacularly yet. We make it to roughly second half of 2019 before the wheels start to fall off?
Mish, also look at the price level of the Russell 2000 to see the break in the larger market. The Russell is at a new low for 2018. S&P600, DJT, and others are at low for the year also. A few high profile stocks have kept some markets above the Jan/Feb lows but it is very shaky.
The quickest way to knock 2000 pts off the Dow is for the Fed to give Trump what he wants – no hike next week. It will be pure comedy listening to the OMG! What does the Fed know? commentary
So who is buying at that level? Don’t tell us it’s the dumb money. Who has deep enough pockets to defend 2600? Not the ignorant public. It has to be a concerted effort on big money and the Fed to defend that level but to what end? It merely delays the inevitable and they’ll pay a heavy price for nothing, and they never do something for nothing. Perhaps a wholly different agenda, e.g. seizing retirement accounts for federal bail ins? How? IDK, but expect the worst.
If people keep automatically adding to their 401k’s each month, don’t the funds have to keep buying?
If they keep buying stock funds. My wife and I are now mainly in short term bonds/Treasuries in our 401K’s as we were in late 2007. No need to put all of the money in stocks unless your plan only allows that (are any that restrictive?)
Many dumb things may happen, but retirement account bail-ins won’t be one of them. There is no need to compel a bail-in (and probably start a revolt) when you can print the currency in unlimited quantities. Diluting the value of existing accounts is more politically expedient. Mass printing may be tried if those in power think it is necessary to maintain their power.
Of course, they want to avoid printing to maintain the value of their own wealth. It will be interesting to see how they try and thread the needle. I suspect they’ll protect some asset classes and let others crash (like bank bondholders v. old GM bondholders) but have no idea who they’ll pick as winners, except themselves.
In order to create the money, they need to push more loans. How many people are in the market for more debt? I doubt they actually pull a helicopter Ben move and just give everyone the cash.
Japan’s modus operandi. No inflation there. I still don’t understand the dynamics of that. It was expected that their bond yields wound skyrocket at as result but the opposite has occurred as well as cpi deflation. Money printing there has the opposite of the textbook expected result and betting against the yen was called the widow makers trade.
“Many dumb things may happen, but retirement account bail-ins won’t be one of them. There is no need to compel a bail-in (and probably start a revolt) when you can print the currency in unlimited quantities.”
California can’t print money. Martin Armstrong noted some time ago that the state has already broached the idea of confiscating and managing Californian 401K’s to support their underfunded pension funds.
Yes, people automatically add to their retirement generates automatic buying, however, consider that as people retire, and begin drawing from their retirement, that generates automatic selling.
As for who else is defending this level, that’s easy, traders who believe that there will be a bounce off of support. Those same traders, however, will abandon their positions if the support is breached, which is why a move after breaching support can be swift.
I believe this is correct. As a trader, I have been shorting in and out since Sept. I am currently holding DIA shorts (closed out my SPY positions when I changed to the Dow). I will likely open QQQ next. If support holds in these three markets, I will look consider going long short term but I am still expecting to make more profit on the short side.
I am agnostic on which direction I trade but probability still favors the downside in my opinion. A recession is long overdue compared with prior cycles but it is possible it holds up longer. I am not one of those who buy the Trump miracle talk and great things to come but either way, I trade technically anyway.
My guess: Santa rally starts by Christmas, and there will be much rejoicing. But it won’t last, the bear is woke.
Da ship be sinkin’
Yes it is and what a freakin’ mess the stock market is.
Stock market investors are finally coming to their senses and realizing that this market is overvalued by at least 75%. Greed and stupidity will get you every time!!!!! Every single time. I have no sympathy for any of them.
I’m thinking the Fed will decide. If the Fed raises rates and signals they’ll keep doing it, it will break. If they signal they’ll hold back, it will be the signal for the final run-up and blow-off top.
Fed will decide on rates when they see what Treasury auctions dictate.