Always say what you see on the charts! Remember TA is about sentiment - until reality catches up.
1 - A popped bubble.
2 - A reinflated bubble.
3 - A reinflated bubble struggling to remain inflated.
4 - Total daily cases of COVID continuing north.
5 - Total daily cases is rising above the area of struggle in the DJI.
Note that the DJI represents sentiment in the top 30 major organisations - so it is important.
I entirely accept that because total daily cases is summative, it is not a sound measure of the impact of the virus on health or control of the virus.
But think deeply - yes these are fundamental issues - representing 'reality'. The total number of people infected means that a percentage of them will suffer lasting effects of the virus e.g. central nervous system problems, mental health disorders, clotting disorders, lung problems, heart problems and exacerbations of previous illnesses. This means there is a mounting economic burden that isn't quite realised by leaders.
Why is biotechnology and services servicing those industries flourishing? Obvious - isn't it.
Healthcare directed at fighting COVID has left lots of people with significantly reduced care for non-covid related conditions. What happens to those people? It can be expected that their health will deteriorate. I can't go into a whole list of medical conditions - but it's massive. There is only minor focus on the economic impact of that. Nations need 'health' for workforces to contribute well to 'the economy' and to service debt.
Our leaders have focused on 'the economy' and preventing a major financial crash that was coming anyway. The virus was just the pinprick. There was in the UK recently a situation where health set against the economy. This was misguided simply because health is the economy.
When people think of health they usually think of physical health. However, there is another ticking time bomb of mental health problems. Nobody knows exactly how big this is gonna be. If you thought people with physical health problems were neglected, then it is much bigger for those with new or pre-existing mental health problems. People who are mentally disabled but were managing with aids, adaptations and supervision aren't getting all that as they would have pre-covid. Is this likely to improve in the next 6 months? I don't think so.
How can economies recover if they are beaten by seriously damaged physical and mental health of its workforces? Difficult one.
Financial hardships are projected to get worse into Winter, in the northern hemisphere. That's not good for physical or mental health.
I have little doubt that agents of the FED will pump this market north, and that Robinhoods will punch the air with the FED. However, you can't create a sound economy built on thin air. The bedrock of a sound economies are the health of people.
If money printing would solve everything, then GDP and employment (of various types) would be irrelevant. Surely they aren't irrelevant.
So - expect the unexpected, is what I'm saying. Near 100% retracements in the face of such fundamental issues has to be suspect. There could be a big 'drop' coming - so stay alert (no predictions today - only probabilities). Those hoping for Gold to rocket north may also have a surprise.
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