Earlier this year stock prices were soaring to levels not witnessed since the Mesozoic Era.
What a difference just a few months can make. The happy, buy everything days of Spring, have morphed into the, stock up on the Doomsday food supply kits and head to the bunker, days of Fall. Yes fall...... its coming....... time flies when your busy staring at a wedge pattern - waiting for it to resolve.
and you know, after the massive, historic stock market rally from the lows in 2009, stock market participants were getting quite portly. The old saying 'pigs get slaughtered' could not be any more apparent than the recent 1 year pattern for the S&P500.
and while I may have been a week early on the 'show me the bacon' pattern, I think resolution time is upon us.
It all started in August, the leaked FED minutes led to a massive rally for the market, only to see that rally give way to selling pressure into the close. The FED Finger was born. Prices came to within 1.5% of new record highs before collapsing.
In my market update later that night, I highlighted the bearish scenario that lay ahead.
Three days later the stock market encountered a rather vicious 'crash'. But they also put in a nice temporary low, as I noted at the time:
However, the writing was on the wall. 9 Months of consolidation had finally given birth to a nasty little bear.
The market experienced a nice recovery off the crash lows, but this past week we were given another reason to sell stocks. The FED Finger re-appeared.
The initial reaction to the FED indecision was a bullish one, but late day selling took prices to session lows into the close. The FED FINGER was back...... courtesy of the 'must follow' on Twitter @stockcats
Are prices going to crash again in three trading sessions as they did the last time the FED Finger appeared?
I've maintained that we will come back to the lows of that crash August Monday. And from the looks of it, the recent bounce is of the short-lived variety.
There is a lot going on this year. We have apocalyptic blood moons, the Pope is making a historic visit to the United States, Fall begins in three trading days....
....and more than anything the FED, by keeping ZIRP, is admitting that 6+ years free money is still not enough in the face of a Global Economy in a downturn.
In Spetember 2012 with the $SPY at $134 (It's at $195 now) I mused that stocks will continue to rally to record highs. But I also stated that the Job market would never recover because of automation. Low interest rates aren't helping the jobless, just making the problem worse.
Here is some of what I was saying 3 years ago:
The Walter White Meth.
The sad fact is, those on Meth who try to get off it, relapse over 90% of the time. The 6+ years of unprecedented Central Bank action is the Meth that has sent stocks to record highs, that has made every large company in the world want to buy back its own stock at historic rates. That has caused currency manipulation on a scale the world has never witnessed before.
If we have learned anything the last 25 years... there is no miracle drug. There is no magic cure. The only question will be: Is this market part of the 18% that can successfully give the finger to its habit.