Why does this melt-up look so strong despite of the slowdown of world economy. Can anybody give me a clue?
Clue #1 - The global stock indexes strengthened up first, well in advance of the U.S. rally, some are making all time highs at a far faster pace than the U.S., acting as the leaders. This validates the U.S. markets march to new highs when the global markets are in sync. Clue #2 - The U.S. indexes spent 12 weeks in a constricting/consolidating price pattern - a long & meaningful correction which provides the fuel for another up leg. Clue #3 - The U.S. indexes have been rallying in the face of some bad news - bullish, reveals that sellers are exhausted. Clue #4 - Seasonal influence kicked in. Nov, Dec, Jan are the strongest performing months historically. Clue #5 - The herd got spooked and went to the sidelines, record outflows. When the herd gets bearish - the market is going higher.
That's straight forward question. It ends when the chart says it is downtrend. Don't listen to the experts who keep on predicting downtrend is starting soon because of this and that data / factor / indicator. Experts said things like Rusell 2000 has been known to lead the way, bond spread (between LT and ST) crossed over thing blablabla.
Thanks for your reply. I noticed that DAX is much stronger than ES. I was so stupid that I shorted ES too much. Finally I realized that the best way is to long ES and stick to it. Short should be just occasional.
Fed is back to QE in stealth mode, that is why. Do not fight the Fed, all I am gonna say. It might pop any time or in 3 years. Trade wisely....
Perfect answer Max. I don’t worry about why the market keeps going up. I just recognize that it is....until it doesn’t. Either way, I trade accordingly.