Because as the $ loses value, we lose purchasing power as anything that is imported rises in price. The FED says "we will leave rates at 0% and keep stimulating for an EXTENDED period of time...." G20 said they will keep pedal to METAL.
SO under the premise that you don't fight the FED, so be long stocks has almost no one worried. FED got our back.
Now I don't know how long this can go, FED more than doubling its balance sheet and obviously picking up paper of much less value than it had. Our GOV backstopping everything.
Liquidity has to flow somewhere, unfortunately it isn't flowing ENOUGH into productive channels. A RISING STOCK MARKET helps Wall STreet, but not avg Joe as much.
How is the Consumer holding up? If they have job, OK. If not not so good. ANd after historic 60% ROMP in stocks, the Consumer Sentiment polls languish near their historic LOWS!
Bank Loans outstanding has been declining. STOCKS by almost any measure are overvalued....BUT FED got your back.
$ is trying to find support.
VOLUME ON UP DAYS has been DRYING UP ever since the beginning of this rally, NEW HIGHS HAVE CONTRACTED as the DOW AND SPX made new highs.
That in and of itself may not point to THE TOP, but it does show selectivity in buying and at least SOME ST caution until 1100 is taken out to woodshed.
Trans NOT at new high, but not far away.
Monday's tend to be bullish, if not so beware, NEXT FRIDAY is options expiration and tend to draw up stocks......
D
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