Can the Markets Keep Climbing?

traderchild

Junior member
15 1
The week’s coming to an end, and the broader market has been on an absolute tear. The main indices are making record closes left and right, with the Dow adding 1000 points in just 17 days. This is no doubt a liquidity driven rally. After all, the fundamentals haven’t changed at all.

I currently have two conflicting thoughts on the roaring price action:

1. This rally is driven by momentum and could keel over relatively easily. Though I much enjoyed Ben Bernanke taking our clueless legislative representatives to school while adding fuel to the markets, caution is needed. One string of bad earnings reports could quickly dampen the mood.

2. The fact that the markets are making all-time highs isn’t necessarily a sell signal. Bears have been calling peaks at every sign of a minor retracement…and every time they’ve gotten crushed. Should we receive good earnings releases and continued positive sentiment there might be even more upside in the short-term.

Other than the approach of the heart of earnings season, there aren’t really clues as to where the market could turn next week. The coming week’s primary market movers (housing, durable goods, jobless claims, etc.) should only indicate trend continuations.

I’m expecting something of a flat line next week with few catalysts for a large turn-around on the horizon. However, markets don’t just camp out at all-time highs for long. I would like the uptrend to continue. But other than the Fed’s balance sheet, I don’t see the elements needed for a sustained high-percentage advance.

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Traderchild | Market Commentary and Actionable Analysis
 

dealer911

Well-known member
436 24
The week’s coming to an end, and the broader market has been on an absolute tear. The main indices are making record closes left and right, with the Dow adding 1000 points in just 17 days. This is no doubt a liquidity driven rally. After all, the fundamentals haven’t changed at all.

I currently have two conflicting thoughts on the roaring price action:

1. This rally is driven by momentum and could keel over relatively easily. Though I much enjoyed Ben Bernanke taking our clueless legislative representatives to school while adding fuel to the markets, caution is needed. One string of bad earnings reports could quickly dampen the mood.

2. The fact that the markets are making all-time highs isn’t necessarily a sell signal. Bears have been calling peaks at every sign of a minor retracement…and every time they’ve gotten crushed. Should we receive good earnings releases and continued positive sentiment there might be even more upside in the short-term.

Other than the approach of the heart of earnings season, there aren’t really clues as to where the market could turn next week. The coming week’s primary market movers (housing, durable goods, jobless claims, etc.) should only indicate trend continuations.

I’m expecting something of a flat line next week with few catalysts for a large turn-around on the horizon. However, markets don’t just camp out at all-time highs for long. I would like the uptrend to continue. But other than the Fed’s balance sheet, I don’t see the elements needed for a sustained high-percentage advance.

If you enjoyed my take on the makrets, check out and subscribe to my page:
Traderchild | Market Commentary and Actionable Analysis


I think this market is liquidity driven - If you think about it then where alse could you put money right now.. negative rates in the bank - negative rates from bonds (apart from the basket case bonds where you wont get your money back!) - Aside from real assets (houses etc..) where else can you put your money and stand a chance of getting a decent return ? - This market can keep going (not today perhaps) and can totally detach from the underlying economic reality!
 

traderchild

Junior member
15 1
I’d agree with that. Right now, it’s very easy to draw the line between improvements in the markets and improvements in the economy. Under QE, our economy has grown at a minuscule annualized rate of 1.5% (as measured by GDP).Despite all of the positive data, that’s the economic reality.

Meanwhile equities are shattering all-time records. Right now, 93% of all S&P 500 stocks are above their 200-day MA. IMO, stocks could hit a pullback if investors start realizing their overextension. I wouldn’t mind the correction – a little bit of de-leveraging might be healthy.
 
 
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