Friday, March 06, 2015

Perfect Storm

I've been gone for awhile hopefully not forgotten.

These are interesting times, IMHO the ship,has sailed on making the easy money. Many stocks have already fallen off the wagon into their own downward bear trends , but these mostly go unseen by the avg investor.

Who cares that hourly wages are falling, and have made a miserable recovery 5 plus years into the zero interest rate manipulated stock market mania. At the same time, in today's report, labor costs are rising which is a bad combo for profits.

A rising US $ is bad for many US company profits , especially the multi nationals.

Unemployment rate is now down to 5.5%, and the feckless FED still has rates pegged at 0%, a CRISIS level. Are we still in a crisis?

Here lies the problem. The world's central bankers are racing each other to lower their rates and weaken their currency, in hopes of stimulating their economy. It should be that easy.

Zirp has made the big players discard any caution and many have levered up large multiples to their cash holding, remember this is what the FED wants...throw caution to the wind and buy buy buy.
And this has caused an historic divergence between the 1% at the top and everyone else! nice going.

Is the weakness in gold, and the plunge in oil prices stemming from overproduction? Weak demand? Or hints of deflation.

Few months ago the Transports did not confirm the new highs in the Dow,  minor in size, but diverge nonetheless.

Now the FED has signaled, it will begin raising rates in 2015, many think this summer. There seem to be a lot more headwinds for US stock prices than there have been in awhile.

The level on the SPX of 1750 I deem important support, and needs to hold.

My own personal indicator has been on a BEAR warning for months. But one additional indicator has yet to confirm.

But I think the easy money has been made ....and one at a time, they must be eyeing the exits....


1 comment:

Anonymous said...

As usual, market bottoms and goes higher with your warning posts.