Princess Gwen here, after a Magical Holiday in the Kingdom. Royal Christmas feasts don't pay for themselves, and this Princess likes to entertain in style, so she must watch the markets.
I've gotten a lot of traction comparing this market to the 2007-2008 collapse, and so, if it continues as it has been, we're now roughly halfway through the first big market drop. We only just hit resistance at 6,300. Continuing downward, the second leg would put us at a low of 5,500. This is interesting, because it also happens to be the first Fib retracement for a macro-level Fibonacci. The market could feasibly pull up from here, but right now it looks like a bear flag. The fact that it's even making a bear flag, while the government is in a shut down is a surprise.
This market is worrying for a lot of reasons, but one of the biggest is that it does everything like 2007, only each move is bigger. Not just by value, but by percentage. A 6% gain in a day isn't normal for a market index, it seems like irrational exuberance. The parallel to 2007 worries me, because it would imply that there is something going on under the surface that we, the consumer market, can't see. Mnuchin tried to reassure us all that the banks have liquidity. Do the banks not have liquidity? Have they over-leveraged themselves in corporate debt, with QE-based money? It's like having a friend tell you that they are not in trouble with a loan shark; the statement breeds its own doubt.
I'm going to just summarily reject any further statement that "The Economy is Healthy," because the market is painting the opposite picture. The good news is that we probably have a few months before the other shoe drops, and we see what's really going on. Nobody really wants to pull back that piece of rotten wood, because whatever's underneath is going to be ugly.
I've gotten a lot of traction comparing this market to the 2007-2008 collapse, and so, if it continues as it has been, we're now roughly halfway through the first big market drop. We only just hit resistance at 6,300. Continuing downward, the second leg would put us at a low of 5,500. This is interesting, because it also happens to be the first Fib retracement for a macro-level Fibonacci. The market could feasibly pull up from here, but right now it looks like a bear flag. The fact that it's even making a bear flag, while the government is in a shut down is a surprise.
This market is worrying for a lot of reasons, but one of the biggest is that it does everything like 2007, only each move is bigger. Not just by value, but by percentage. A 6% gain in a day isn't normal for a market index, it seems like irrational exuberance. The parallel to 2007 worries me, because it would imply that there is something going on under the surface that we, the consumer market, can't see. Mnuchin tried to reassure us all that the banks have liquidity. Do the banks not have liquidity? Have they over-leveraged themselves in corporate debt, with QE-based money? It's like having a friend tell you that they are not in trouble with a loan shark; the statement breeds its own doubt.
I'm going to just summarily reject any further statement that "The Economy is Healthy," because the market is painting the opposite picture. The good news is that we probably have a few months before the other shoe drops, and we see what's really going on. Nobody really wants to pull back that piece of rotten wood, because whatever's underneath is going to be ugly.
Comment:
The original graph where I drew in the Fib Levels
