April 13, 2019
Weekly Market Outlook
By Keith Schneider
US and Global Equities continued to rally, with the NASDQ 100 +.63% for the week. It is just a hair from making new all-time highs, as shown on the chart above
This rally off the Late December lows is a classic V pattern that has taken 6 months to complete. This V pattern, so late in the economic cycle is highly unusual.
Is this the new physics of shorting, where seller’s equity gets sucked into a Black Hole, never to be seen or heard from again? Are we about to melt up?
Are there new market physics at play that suggest fundamentals are meaningless, economic cycles don’t matter, and central bankers can cut rates to negative and keep stocks elevated forever?
We don’t think so and believe a Supernova is in the making, though just not yet. The tricky thing is that when Supernova’s erupt, it is often the consequence of sudden gravitational collapse.
Supernovas were observed by humans over 5000 years ago and although we still don’t know exactly when they will erupt, we can see when they do.
Hence, the key to avoid Black Holes and Supernovas in the financial markets, is to use charts and employ risk control. Trading off murky fundamentals or using a buy and hold strategy is likely to end up sucking your equity into oblivion.
This week’s highlights are:
So, while Equities continue to climb, we will not fight the tape. However, we remain vigilant, watching for early signs that that a Supernova has burst and avoid sending our hard-earned equity into a Black Hole. Since momentum often precedes price, check out our Real Motion Indicators that are designed to do just that.
Best Wishes for your Trading
CEO – MarketGauge.com