Hey Guys. I was gonna post this on Saturday but got busy. We broke down from the trend line and the rising wedge after the Fed Meeting and retested the trend line on Friday. By looking at futures today the retest is failed. I outlined in color what we should expect from this correction. We get to orange support line expect waterfall type sell-off.
As I said on my previous post, October was not the Bubble Bursting but this one is a possible one. This rally was induced by Corporate Buy Backs due to Fed Capitulation back in December not on fundamentals (Q1 2019 was the worst start of the year for outflows from investors since 2008 according to BofA Merrill Lynch Global Strategy, EPFR Global) Low-interest rates equals to more buybacks. Fed flipped 180 % and QT is ending in May (4 trillion balance sheet stays unchanged)
No tools left for the next Crisis due to not able to raise rates and normalize their balance sheet .
Scenario one: We Crash in the next two weeks. If we do crash it will be 30-40% drop . Only problem with this scenario is that Crashes don't usually happen in the summer and it seems no stopping for the Buybacks yet.
Scenario two: We get a 8-10% correction and rally on low volume like summer of 2018. Crash after making a Final Blow Off Top to the end of 2019.
Current Administration doesn't want this Market Crashing until 2020 Election so they are asking the Fed to cut rates by 0.50 basis points and launch QE4 (didn't expect to hear about QE4 this fast). Even messed with the Q1 2019 GDP number by using deflator of 0.9% for inflation compare to 1.8% Q4 2018. Oil prices went up 40% this year. If we use same metrics GDP 2-2.20% expect downward revision.
Will they manage to fool the General Public to offset Recession?
Stock Market is holding the whole Economy at this point. Stock Market goes so does the Economy
As I said on my previous post, October was not the Bubble Bursting but this one is a possible one. This rally was induced by Corporate Buy Backs due to Fed Capitulation back in December not on fundamentals (Q1 2019 was the worst start of the year for outflows from investors since 2008 according to BofA Merrill Lynch Global Strategy, EPFR Global) Low-interest rates equals to more buybacks. Fed flipped 180 % and QT is ending in May (4 trillion balance sheet stays unchanged)
No tools left for the next Crisis due to not able to raise rates and normalize their balance sheet .
Scenario one: We Crash in the next two weeks. If we do crash it will be 30-40% drop . Only problem with this scenario is that Crashes don't usually happen in the summer and it seems no stopping for the Buybacks yet.
Scenario two: We get a 8-10% correction and rally on low volume like summer of 2018. Crash after making a Final Blow Off Top to the end of 2019.
Current Administration doesn't want this Market Crashing until 2020 Election so they are asking the Fed to cut rates by 0.50 basis points and launch QE4 (didn't expect to hear about QE4 this fast). Even messed with the Q1 2019 GDP number by using deflator of 0.9% for inflation compare to 1.8% Q4 2018. Oil prices went up 40% this year. If we use same metrics GDP 2-2.20% expect downward revision.
Will they manage to fool the General Public to offset Recession?
Stock Market is holding the whole Economy at this point. Stock Market goes so does the Economy
