A personal note to my readers – I have been trading for a living for over 25 years and have to say, that these are some of the most chaotic and unpredictable markets I can ever recall seeing over that time span.
That is why I have been strongly urging you to trade smaller portions of your portfolios that you have in the past.
Reversals, flips, flops, you name it, we are getting it. Every bit of it has been caused, in my opinion, by the Central Bankers of the West, who simply refuse to get out of the constant interference in the markets game. It does not take an highly educated observer to understand that the path which the global equity markets want to take is DOWN, IF THEY WERE LEFT TO THEMSELVES.
The uncertainty, sluggish growth, mediocre job creation, abysmally low interest rates, all suggest stock prices that are grossly overpriced for the actual real economy and yet, until just today, the S&P 500 was not far off all time record highs once again.
The problem is, as soon as the equity markets look set to rollover by actually factoring these fundamental conditions into prices, up pop the Central Bankers with yet another barrage of words, phrases, adjectives and, oh yes, something “stimulative” in nature – at least in theory – which then completely frustrates the downside in equities and produces yet another upside move higher in stocks.
These rallies last long enough to manage to flip most technical indicators onto the buy side, whereupon at that point, the market realizes that the move is not based on anything solid but rather on repositioning, short covering, yield seeking or momentum buying, none of which have anything to do with the actual effectiveness ( lack thereof) of the CB's policy prescriptions. When that occurs, back down they go, again and again and again.
Hedge funds are getting shredded in this environment with a growing realization that the markets have become unhinged from reality. What we are getting instead is simply movements in price created by computers firing off buy or sell orders in huge numbers.
