Stocks Near Long-Term Resistance
As the S&P 500 nears a long term trending resistance, weekly MA(50), and short term resistance, it may be time for bulls to take profits and shorts to pile in. The markets will have a very tough time breaking above 975 (basis the S&P). This rally is way overextended… I would like to see a pullback to the March lows.
This bear rally has been driven mostly by greed and impatience as cash heavy funds have been dumping low yielding treasuries to chase stocks. There is a TON of liquidity lying around right now, and most of it is denominated US dollars that have been rapidly losing value. Investors are eager to put their worthless dollars to work whether it is in equities or commodities, both of which have enjoyed big gains as the dollar has plummeted. The fundamentals like unemployment and foreclosures continue to deteriorate. The only bull case for equities right now is that inflation is starting to creep into the markets.
There is a lot of turmoil in the bond markets as the cost of borrowing increases. If this sell-off in treasuries is not contained, it will foil the Fed’s plan to artificially suppress mortgage rates and this whole web of debt will unfold.
Original post here: Johns Wu
Comments
Leave a Reply