I don't have a lot of time for anywhere near as in-depth as I'd like to go on the current market conditions regarding COVID-19 and Federal Reserve policy; but I'll try to get the important points.
The Federal Reserve Money Printer has been going "BRRRR..." for a while now. The interest rates are already essentially slashed to zero and without going negative they are starting to run out of options to keep this boat artificially afloat. The Fed kicked it's Quantitative Easing program that staved off the 2008 recession into warp/overdrive lately by beginning to buy billions of corporate bonds and ETF's. The Fed's balance sheet has ballooned from about 3 Trillion to over 7 Trillion in assets. That's essentially 4 Trillion dollars the fed has poofed out of thin air and now pumped into the M1 Money Supply.
The crash in March was exactly that; a crash. I believe we are headed for a potential multi-year recession. This inflation is essentially a silent tax to bail out corporations at the cost of the taxpayer, without the actual outrage that comes from raising taxes. Couple that with the billions upon billions in corporate tax breaks you've got a double-whammy against the working class. Boeing for example crashed from over ~$350 to $80 and almost went bankrupt because they made a bunch of planes that fall apart and companies began cancelling orders left and right when the economy shut down. Well guess who's also a military contractor; makes all our Apaches and is "too big to fail" and got hundreds of millions in Federal aid at the cost of tax payers. Those fortunate enough to have investments in Boeing and the like? They'll do just fine. The Rich CAN and WILL get hurt during the crash; but they will get bailed out.
But what happens to the little guy who's 401k and retirement fund take a -30-40% haircut? By the time they realize the music has stopped and there are no chairs left for them it will be too late and their advisors will most likely tell them to hold. Throw potentially losing your job on top of losing your retirement and that's a recipe for major multi-year recession. We've also got my generation JUST entering the housing market at record highs. While sure; they have low 3-4% interest rate APRs on their mortgages what happens if and when they get let go from their job and can't make payments on houses that may potentially be worth less than when they bought them.
In order to stave this off we probably would have had to let the economy grow naturally and in line with GDP and let the companies that go bankrupt fail. A meritocracy; but everyone is too afraid to do that as that means layoffs and unemployment temporarily and it "looks bad" on the politicians in office. So instead they just all keep propping things up in turn like a huge game of musical "fuck the middle class" chairs (minimum is still $7.25/hr mind you lol). However, just like emotions; you can't bottle up your problems forever and pretend they don't exist. if you keep pushing it off and don't find healthy outlets; eventually that bottle starts to crack and the cork pops and it all comes rushing out at once.
Here's my analysis of the NDX / NASDAQ Top 100:
We've got a Bearish Divergence on RSI which is VERY concerning; that's one of my strongest indicators and what precursed the last crash in March; except this one is bigger and badder and we have broken past the old record highs we started from... meaning the pain could be even worse. Some would argue this divergence could continue to play out up until ~11,500-12,000 and i'd be inclined to agree; there are trendlines that support that theory. We currently sit at we currently sit at 10,637.52 at the time of writing (18 minute before market close, 7/16/2020).
My upside target is the 1.68 Fibonacci Retracement drawn off of the crash in March; aka the green box @ 11,565
My downside target to be conservative is the 0.618 retracement from this recovery; aka the red box @ 8418.9
The Federal Reserve Money Printer has been going "BRRRR..." for a while now. The interest rates are already essentially slashed to zero and without going negative they are starting to run out of options to keep this boat artificially afloat. The Fed kicked it's Quantitative Easing program that staved off the 2008 recession into warp/overdrive lately by beginning to buy billions of corporate bonds and ETF's. The Fed's balance sheet has ballooned from about 3 Trillion to over 7 Trillion in assets. That's essentially 4 Trillion dollars the fed has poofed out of thin air and now pumped into the M1 Money Supply.
The crash in March was exactly that; a crash. I believe we are headed for a potential multi-year recession. This inflation is essentially a silent tax to bail out corporations at the cost of the taxpayer, without the actual outrage that comes from raising taxes. Couple that with the billions upon billions in corporate tax breaks you've got a double-whammy against the working class. Boeing for example crashed from over ~$350 to $80 and almost went bankrupt because they made a bunch of planes that fall apart and companies began cancelling orders left and right when the economy shut down. Well guess who's also a military contractor; makes all our Apaches and is "too big to fail" and got hundreds of millions in Federal aid at the cost of tax payers. Those fortunate enough to have investments in Boeing and the like? They'll do just fine. The Rich CAN and WILL get hurt during the crash; but they will get bailed out.
But what happens to the little guy who's 401k and retirement fund take a -30-40% haircut? By the time they realize the music has stopped and there are no chairs left for them it will be too late and their advisors will most likely tell them to hold. Throw potentially losing your job on top of losing your retirement and that's a recipe for major multi-year recession. We've also got my generation JUST entering the housing market at record highs. While sure; they have low 3-4% interest rate APRs on their mortgages what happens if and when they get let go from their job and can't make payments on houses that may potentially be worth less than when they bought them.
In order to stave this off we probably would have had to let the economy grow naturally and in line with GDP and let the companies that go bankrupt fail. A meritocracy; but everyone is too afraid to do that as that means layoffs and unemployment temporarily and it "looks bad" on the politicians in office. So instead they just all keep propping things up in turn like a huge game of musical "fuck the middle class" chairs (minimum is still $7.25/hr mind you lol). However, just like emotions; you can't bottle up your problems forever and pretend they don't exist. if you keep pushing it off and don't find healthy outlets; eventually that bottle starts to crack and the cork pops and it all comes rushing out at once.
Here's my analysis of the NDX / NASDAQ Top 100:
We've got a Bearish Divergence on RSI which is VERY concerning; that's one of my strongest indicators and what precursed the last crash in March; except this one is bigger and badder and we have broken past the old record highs we started from... meaning the pain could be even worse. Some would argue this divergence could continue to play out up until ~11,500-12,000 and i'd be inclined to agree; there are trendlines that support that theory. We currently sit at we currently sit at 10,637.52 at the time of writing (18 minute before market close, 7/16/2020).
My upside target is the 1.68 Fibonacci Retracement drawn off of the crash in March; aka the green box @ 11,565
My downside target to be conservative is the 0.618 retracement from this recovery; aka the red box @ 8418.9
Comment:
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Comment:
“I’ll tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful”— Warren Buffett
Trade active:
It has begun... :)