Market Analysis

Chipping Away

$AAPL, the largest tech stock on the planet, pounds out a revenue warning and $NDX makes new all time highs. Ha ha.

Poor bears, if you can’t take advantage of the shutting down of the 2nd largest economy and a revenue warning from a $1.4 trillion market cap company and not even manage a single down day in tech, what will it take or so sentiment goes.

This market is impervious to anything. So it seems anyway.

However, fact is, bears are steadily chipping away at the foundation of this liquidity fueled rally. Yesterday again the Fed flooded markets with “temporary liquidity” as they like to call it.

Despite the Fed claiming to slowly reduce repo, $78.5B in repo before market open is still a whopper by any definition.

And besides: Whats temporary about this?

Short answer: Nothing. The Fed keeps expanding its treasury holdings and yes the yield curve inverted again:

The greatest economy ever requires ungodly sums of liquidity to keep markets from selling off.

But none of these efforts can hide the cracks that are taking place underneath.

Cumulative internals on Nasdaq suggest the same pattern we’ve seen over and over again preceding larger corrections:

The final highs coming on marked weakening in the cumulative advance decline issues.

For more confirmation check the percent of $NDX components above their 50MA:

Declining again as $NDX keeps squeezing out new highs. For now.

And, as a reminder, all this is happening with $NDX more than 400 points above its monthly Bollinger band:

Tops are processes and this process here seems intent to squeeze every last drop out of this rally.

$NDX keeps making new highs on the surface and bulls are celebrating. Beneath the surface bears are chipping away at the foundation.


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Categories: Market Analysis

5 replies »

  1. Trump is not going to let this market go down till the elections are over with in November, even if we have a correction now and then. Most times with the stock market, logic gets trumped by herd greed. You can keep drawing all the wedges you want and make arguments that the stock market needs to go down, but to no avail. Sorry, the markets won’t listen. Your time will come, but NOT today or in the next 6 months. Look at Lowry reports. Internal market strength is still too strong. Buyers are buying with both hands and they outrun the sellers.

    • At some point….Mr. Market will trump….Trump. As he has done so since the first trade was ever made. Maybe it was a rock for a piece of meat. Who knows? The point is that this will all end so badly with so much collateral damage that it will take generations….generations to recover. All on the back of these idiots and their printing press…

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