Thursday, February 16, 2017

And some more charts, while I still can....


SPY:


Six white candles in a row, RSI 78, means this is overbought.

Then again, (1) Wooh Trump, (2) the US averages did spend two entire years consolidating sideways, right?

So this is not evidence of a blow-off top, no matter which doomer blogger you read. But it's definitely getting stupid. A 24 PE is stupid.

And no, macroeconomics says that massive tax breaks don't improve GDP when unemployment is at NAIRU. Especially not when they're funded by taking money away from the poor. That's actually contractionary, not expansionary.

Though portfolio theory does say that would have a positive wealth effect for both stocks and bonds.

QQQ:


QQQ is looking even more frothy, with 9 white candles in a row, and RSI >82. Then again, most of that comes from AAPL, which gapped up at the start of the month and continues to run away from the market. So maybe the froth will go on.

Yes, trade economics says that when the world trade and technology hegemon becomes belligerent, the most powerful US tech leaders and innovators will necessarily profit. Cuz I said so.

Trannies:


If there is a blow-off top forming, you have to ask what should happen to it the moment that $TRAN confirms it after a 2-month consolidation. Dow theory says this'll make the blow-off gather steam. We'll have to see if the $TRAN breakout holds.

Banks:


This is utter bullshit. Eliminating bank regulation won't make them more profitable.

How do I know?

Because Clinton eliminated all bank regulation in the 90s, and 1) it took bank equities several years before they went on their run, 2) that mid-2000s run was actually not worth investing in because there were better places to be (potash, mining, oil, US consumer, EMs - I can list you 100 stocks and ETFs that had a much better return than any major bank), and 3) it turned out that the banks were only running Ponzi schemes, so that profitability was only an illusion.

So the >20% advance we've already seen in the banks is already bullshit, and any continued bullshit from here on is basically a big red flag indicating where the next crash is going to be.

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