Slightly Choppy with a Chance of Breakout
Stocks are up slightly this morning, most likely due to President Trump’s rapid recovery from COVID-19. Remember, futures first plunged on Thursday night / Friday morning when he announced he and the First Lady had tested positive for COVID-19.
Despite all of the excitement, the market remains in a kind of “no man’s land” between resistance (the red line) and support (the green line). Until we break one of these lines with conviction, stocks are in a chop fest.
Stepping back from the day to day, the S&P 500 looks to be forming an inverse Head and Shoulders pattern. If we break above that neckline, the upside target will be new all-time highs. By the look of things, we’ll know if this will be the case by the end of the week.
The Driving Force Behind the Market’s Strength
Why would this happen?
Because the Fed and other major central banks have gone “all in” on their efforts to create a stock market bubble.
Forget politics, forget social issues, forget all of that stuff. The one thing that matters to central banks is keeping the markets elevated.
At the end of the day, it all boils down to what I’ve been saying since 2017… that the Fed and other central banks are trapped in a vicious cycle through which it INTENTIONALLY creates bubbles to deal with each successive bust.
We had the Tech Bubble in the ’90s.
The Housing Bubble in the mid-00s.
And now the Everything Bubble in 2020.
Editor, Money & Crisis