It doesn't matter at all why the market goes up or down; it doesn't matter if it's liquidity-driven or not. It's useless to break your head on those things. Just make sure you're in the right direction, that's all that counts. And whether the move is irrational or not doesn't matter, try to catch the money. That's all that counts. So don't waste your energy on things that have no importance.
there is not enough money in the world sitting on the sidelines to pay for all the "paper written on top of paper written on top of paper" so i am very confident in which camp to prop my tent. technicals can always be ignored and sometimes for years at a time-----but fundamentals are never ignored for any length of time. the markets and the world are over leveraged and extensively liquified--------mean reversion will take place probably about the time the camp fire is ready to cook some burgers. ok, the wood is stacked now------who has some matches?
Macro, I fully agree with your analysis. But I think the powers that be will fight this "mean reversion" (i.e. asset price deflation) with any means, including unorthodox ones. In fact, I'm pretty sure they've been doing it since 2003. The US asset markets won't be allowed to correct. And the effects are spilling over to other equity markets, e.g. Euro equities are on fire and now almost as overpriced as US equities(although I think this is a function of smart money positioning itself against the next stage of USD debasement).
yes, the game becomes more apparent as every day, week and month pass. It really isn't a grand conspiracy since the Federal Reserve essentially gave the markets a heads up back in 2002 as the rate cuts were not having their intended effects.
As long as the government believes inflation is in check (which will be, as long as there is enough productivity growth, which i believe there is), interest rates will stay low and equities are not overpriced at the moment. technology is still developing at exponential speed, hence i believe productivity growth will not stop. i could even make a bullish case for equities out of this. what if the united states switches to "fair tax"? productivity will grow at blistering speed.
=================== Good points spike500, and ; Mark Cook sell post had perhaps some good counterpoints.
I agree with this, but what are the chances this (flat/fair tax) will happen? Not likely, but I can always hope.