Looks like the buying just wont stop I didnt believe in it - but the january effect is in full effect!
The January Effect, HA Last January we had a negative month and markets closed higher, take that saying with a grain of salt. You do know markets sell off a lot quicker than they rise.
Just think of this as 2003-07, except with a turbo booster. It's the convulsions theory at work, basically the market seems to be repeating the boom and bust cycles of yesteryear with greater amplitude. I see the exact same mentality of the final years of that phase where the buying goes on autopilot and the volatility drops to record lows. It's pretty much insane but not much we can do about it. (I should amend that by saying that I believe nothing fundamentally really resembles 2003-07, just the mindset of gunning everything higher with limited pullbacks. I believe while it took 4 years to exhaust that bubble, this one will never make it to 4 years)
The pullback comes when least expected, I remember this same type of hype back in 2007, I remember stocks breaking new highs on a daily basis, those good times came to an end pretty quick as they do when fear steps into the market place, the market can drop a 1000 points in a week but take months to gain that same 1000 points back, this is all greed taking over in the market place, its a liquidity driven rally. Stocks are up hundreds of percent over the last 8 months and the bulls want even more gains, I mean talk about greed. Many are calling for DOW 12k, 13k by the end of the year, im sure we might get there with all that great stimulus but when the bottom drops out your going to see selling like you never seen before.
go look at the put to call. 4 straight days its in collapsing motion as nobody dare short or buy puts.lets put something in perspective. from 2002-2007 the s@p gained around 110% in 5 1/2 years. earnings and profit margins were some of the highest in history. we had a private equity mania with $400 bil of buyouts. in 10 months now the s@p is up 71%. so in 1/6th the time we already covered 75% of the last bull mkt AND WE'VE YET TO HAVE OUR FIRST YEAR OVER YEAR EARNINGS GROW. MATTER OF FACT LAST QTRS EARNINGS WERE DOWN 14%. the greed matches anything we've ever seen. theres 100 other stas i could name to show the craziness but the only fact that matters is price and that clearly says up up and up more
all the interventions and backstops are destroying the whole system. people have simply quit and left.
Exactly, we are covering the previous boom cycle in a parabolic state, even though the day to day activity feels as if it's going nowhere. Just like the latter stages of the 03-07 rally, the market makes the majority of its gains prior to the NY opening (i.e. just alot of opening gaps with bid sitting and HFT filling in the vacuum of price discovery). Basically, central banks decided inflating assets was the goal, fundamentals need not apply.
How can anyone do any analysis of anything after what has happened in the last year. First the crash, and then instead of dealing with loses, going on a money printing spree and guranteeing everything to everyone. This is stuff straight out of the USSR and people know how that ended. There is no transparency on anything which means a huge shock could come at anytime