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Working Overtime?
March 27th, 2016
Keith Schneider
CEO, MarketGauge.com | |  US Equity markets dodged the horrible news of the deadly terrorist attacks in Belgium and the clear intention of ISIS to obtain nuclear material this week and closed slightly down to basically flat. Considering that any bad news could have unhinged an overbought market that’s up over 10 % since its early swoon this year is classic bad news, good action. Gold, which has been the outperformer this year, fell hard this week in alignment with the market shrug off. That’s also a bullish indicator for equities. On the flip side, even with the positive price action on Friday, market internals are rolling over along with a trend line break off the February lows. One might attribute recent action to a world aestheticized to terrorism. Another could be a change in market dynamics such as high frequency trading, dark pools, use of derivatives, and the speed in which markets digest new information because of smart phones and social media. The other reason is much simpler; the intention of central banks is to keep equities prices high. We think it’s all the above and so welcome to the first century of the third millennium. The PPT (plunge protection team) invented here has gone global and is the model all central banks are using. They have been burning the midnight oil. Of course, burning all that oil might have helped fuel the snapback rally in crude over the past month. The crude rally directly correlates almost to the tick to the rally in equities. It’s about as a reasonable explanation for recent market action as anything else. The unintended consequences of the artifact of negative interest rates are still unknown and must have Von Mises turning over in his grave. Market Internals have clearly weakened. Let’s go to this week’s video and take a look under the hood. Click here for this weeks video. | |
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