Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Thursday, the 9th of August.
Should the equity markets close higher today, and I emphasize "should", that would mark the fifth day in a row the markets have closed on an up note. The last time that happened was over five months ago in early March of this year. It's a pretty rare occurrence when you see a market do this. I am sure a lot of the bears are perplexed as to why the market is not tanking given all the problems of a slowing world economy. The latest bad news report was out of China this morning, it showed that factory output had slowed in July to the weakest level in over three years and this was below what most analysts had been looking for.
Like life, there is reality and there is fantasy, and right now the market chooses to be optimistic, hoping for that ever elusive stimulus program that may never occur or it may occur sooner than we expect. One never knows for sure and it is this uncertainty that is driving the market.
Now, let's analyze the major markets and stocks on the move using MarketClub's Trade Triangle Technology.
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I think the market is dominated foremost by fear, where the inflationary forces counterfeiting the payment of our obligations is locked in cruise control, and further stimulus is a luxury subjected to excessive inflation. The fundamentals of slowing demand continue fueling larger monetized deficits. Politically and financially substantial corporations on the other hand are gaining market share and diminishing the pool of competition through acquisitions and bankruptcies of their weaker counterparts. Government deficit spending in more ways than one is expanding a joint government corporate stage for profiteering........say goodbye to trust-busting and capitalism as you knew it.
No, it is not. Much of the market behavior is influenced by emotional factors of greed, fear, thrill of risk taking and the like. Sometimes it seems as if the market is more like a flock of birds than an interaction between thinking beings.
My guess is that the bears are out and they will stay out till conditions for the future become more clear. Those that choose to get in and buy have money to risk and since volume is low they drive the markets up. I doubt that much of the money going into stocks actually belongs to the people tossing it in. The rest is computer trades moving on headlines and other data. Anyway you slice it people have become complacent with the very dark clouds looming over head... The bet on money printing is not a bad one in the short term, because as economies worsen money will be printed and printed and printed. There will be no other path, since politicians are cowards and most voters are stupid.. But at the end of that path we all know what is waiting.