Wow I had to add another line
Original thought was, stays above middle line, bullish, if it goes over top line, bearish, same for crossing under bottom line. But now, I think if it manages to go above the top line, we are in a happy place.
Though it isn't guaranteed to happen, let's all remember a month and a half ago we had our previous bottom. We got to the week of Fed FOMC and started a bounce that only intensified after the rate hike decision. Partially because it was only the bare minimum .25% (but also because everything else didn't go to heck). I believe its the same here, but how that translates is: we have to see what happens after the decision is announced, if all the other gyroscopes in the global financial system start going haywire, stocks will crash further. If not, they'll bounce with a 'worst is behind us' mentality.
Now, more likely than not, the worst is yet to be behind us -- still many people refusing to believe we'll hike ourselves into a recession until they see one and stocks are way overvalued if we really are going to see 2% federal funds rate by the end of the year. But the markets are doing pretty well and will have many bounces along the way as the worst case scenario continues to elude us.
GDP and other economic indicators be dammed. Stocks trade on correlation, liquidity and a receding TNA mentality. It's not about earnings or growth in the overall market. Indexes will trade on how much money is in the system and expectations of how much money is in the system. Which btw, is also subject to the cost of leverage.
Though it isn't guaranteed to happen, let's all remember a month and a half ago we had our previous bottom. We got to the week of Fed FOMC and started a bounce that only intensified after the rate hike decision. Partially because it was only the bare minimum .25% (but also because everything else didn't go to heck). I believe its the same here, but how that translates is: we have to see what happens after the decision is announced, if all the other gyroscopes in the global financial system start going haywire, stocks will crash further. If not, they'll bounce with a 'worst is behind us' mentality.
Now, more likely than not, the worst is yet to be behind us -- still many people refusing to believe we'll hike ourselves into a recession until they see one and stocks are way overvalued if we really are going to see 2% federal funds rate by the end of the year. But the markets are doing pretty well and will have many bounces along the way as the worst case scenario continues to elude us.
GDP and other economic indicators be dammed. Stocks trade on correlation, liquidity and a receding TNA mentality. It's not about earnings or growth in the overall market. Indexes will trade on how much money is in the system and expectations of how much money is in the system. Which btw, is also subject to the cost of leverage.
I usually try not to tell you what to do -- too crowded there. I'll point out what price points/trends/patterns the pros are looking at and let you interpret what that means for your portfolio.
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