Down To The Wire: Market Distortions Getting Worse. Or An Upside Breakout? Gregory Mannarino (Video)
Down To The Wire: Market Distortions Getting Worse
15 Sep 15
Yup, down to the wire folks. Getting much to uncomfortable. Check this out:
Stock Market: An Upside Breakout? It All Depends On The Fed.
As I am writing this article the Dow Jones Industrial Average is up over 1%, (180 points). Stocks are actually rallying off of several rounds of bad economic news, namely the Empire State Manufacturing Index coming in very weak, and industrial output falling. This weak data sparked a rally in stocks as Wall Street now believes that a Federal Reserve rate hike is very unlikely.
So to summarize the last few paragraphs, bad economic news is good for the stock market..
Today’s game in the stock market is simple: the worse the economic news, the higher stocks will go.
The Federal Reserve has really created a financial Frankenstein, in that we now exist in a market of incredible distortions. In fact the Federal Reserve managed market has caused the price action of equities to do the polar opposite of what they should be doing.
As of late the price action in stocks has caused technical breakdowns in this market however, today’s rally off of bad economic news may have caused a reversal and again, it all depends on the Fed.
Have a look at the chart below.
Outlined in red is a clear “bear flag,” however today’s “bad news rally” appears to have caused a breakout.
The real question is this: will it continue?
It all depends on the Federal Reserve’s announcement with regard to raising rates due out this Thursday.
I believe that if the Fed. Does not raise rates, further upside to this market is possible. However, once the exuberance wears off of “no rate hike,” the next question for the market will be: OK so if not now, when? Markets may fall.
Personally I am on the fence with whether the Fed. Will or will not raise rates. The fact is that the US economy continues to be weak, as reflected again in the poor economic news from today. On the other hand the Fed. Really seems to “want” to raise rates, and has been broadcasting this desire to the markets for months.
Well we are down to the wire. Will they or wont they.. SOURCE
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Whistler Blowers, Insiders
Since the majority of shares are now owned by the Plunge Protection Team trading between state backed hedge funds hardly qualifies as a ‘market’.