Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight.
Perma Bull or Perma Hate
The masses do not believe this market can trend higher; sentiment is decidedly negative, and this has been confirmed time and time again. For months on end investors in the neutral or bearish camp have ranked higher than those in the bullish camp. What is surprising is that the higher this market trends, the more anxious the masses become. In a nutshell, that is precisely why this market will continue to run higher and higher.
We agree that the driving forces behind this economy are illusory in nature and that this economic miracle has and is being supported by hot money. Nothing else is driving this economic recovery. Any piece of data that can be manipulated has been manipulated to suit whatever picture the Fed wants to paint; all this is true but fighting the Fed is going to lead you nowhere but to an early grave. Until the trend turns negative all sharp pullbacks should be embraced.
Central bankers have embraced the era of negative rates,
And this experiment will not end until we have another currency crisis. Who knows when this will occur? What we do know is that many of those who were dead certain this would transpire in their lifetime are no longer here. One clue that something is amiss will be when the masses move into the euphoric camp, and they are a long way from that zone.
One would think after the market surged to new highs, the number of individuals in the bullish camp would soar, but no such luck. In fact, our proprietary “anxiety index” reveals that the crowd has remained in the circle of “fear zone “and has not moved into the calm zone once in the past six months. Data reveals that the crowd has been unusually pessimistic for an extended period.
Perma Bull is Still Intact as Hot Money is the Main Driving force
The Fed and the corporate world understand that there is no economic recovery and that the moment the hot money stops, this bull will drop dead in its tracks. Moreover, that is precisely why the Fed will not stop supporting this market. The Fed and the corporate world will do whatever it takes to maintain the illusion that all is well. That includes creating and throwing as much money into the markets as is necessary to propel them higher and those that stand by and try to fight the Fed are going to be run down mercilessly.
The mass mindset is now at the stage where they accept this as the new norm. They want the illusion; they do not want to deal with reality because they were raised in an illusory world and for them, the illusory is far easier to deal with than reality. Hence, the saying “tell me sweet lies”. Individuals should expect the markets to be manipulated in ways that will shock anyone that is 40 or older.
This Perma Bull Will be interrupted With Sharp Corrections
The era of hot money is not over; it has just begun as Central bankers have embraced the concept we have termed “inflate to infinity”. Moreover, when the Fed adopts negative rates, it will be like pouring Jet fuel onto a raging inferno. Translation, the stock market is going to soar so high that even the most ardent of bulls will be shocked. One day this bull market will be shot dead in its tracks, but that day is not upon us yet. Until then you should view all sharp pullbacks as buying opportunities; the more substantial the pullback, the better the opportunity.
This is why it will not; it will crash (more like a very sharp correction) one day, but that day is not upon us yet. The markets will most likely trade a lot higher than any of these naysayers could ever envision. The Fed is far stronger than few hundred loud mouths that claim to be experts but, in reality, know next to nothing. Lastly, in such an environment it makes sense to put some money into precious Metals.
Perma Bull Update After Coronavirus Pandemic April 2020
On the other hand, the media is using statistics to create a false narrative because vital data is left out. Another area where the press is going out of its way to create more hysteria is in how it’s reporting the situation in New York. Stating that there is a spike in new cases is totally absurd and then twisting the data to give the impression that it’s as dangerous to the young is as the elderly is downright criminal.
Anyone with common sense knows that the rate will spike if more testing is done. What they should be stating is that despite the increased testing the death rate is holding at 1.28% for all age groups. This same ploy is used over and over again to stampede the masses. Never take anything at face value, always dig deeper.
The masses are nervous so use all pullbacks to add to your positions. Forget the noise and focus on the trend.
Anger, if not restrained, is frequently more hurtful to us than the injury that provokes it.
Other Articles of Interest
Stock Trends & The Corona Virus Factor (March 14)
Trading The Markets & Investor Sentiment (March 3)