US jobless claims while higher are pulling back, regardless of whether they pullback or not, they are no longer as important as they once used to be. The reason for this is AI and machines; we have reached the point where it is becoming easier and easier to replace machines with AI. New technologies are making humans more efficient, which means what used to take several individuals to complete.
Jobless claims continue to decline, and that’s a positive, as far as the markets are concerned. Another indirect confirmation that there is an agenda behind this pandemic and as we have been stating all along, the idea is and was to flood the system with as much money as possible. Notice how the focus has shifted from coronavirus to the riots taking place over the US and social distancing is in the toilet. Let’s how long the media pushes this theme for if they create another mountain out of a molehill, it could be used as an excuse to add more liquidity to the system and push through a new set of laws bringing the US one step closer to the Orwellian state.
US jobless claims don’t matter as Governments manipulate all the data
In the face of all this manipulation, the Mother of all buys signal has been triggered; “my my” what a world we live in? A MOB signal in the face of such rampant manipulation is like pouring jet fuel or blazing inferno. Astute players can use sharp pullbacks to keep adding to or opening new long positions until at least Dow 33K is hit. However, just because we have an MOB it does not mean the markets will trend upwards only. A MOB is a long term buy signal.
Looking at the sentiment data, we have never had a period when the markets are rallying, and sentiment has remained negative for weeks on end.
To put it mildly, the Fed’s current actions are unprecedented, and the Fed is going to ensure that the masses embrace this bull market willingly or unwillingly. Unwillingly by making it so expensive to hold onto cash that every Tom, Dick and Harry is going to jump into this market. Now is the perfect time to come out with some insane projections and the reaction will probably be the same when we announced Dow 30K well before the Dow even tested 24K. Market Update May 24, 2020
We defined each phase of the bull market since the markets bottomed out in 2009. As this is a new bull of sorts and utterly different from all the bull markets to date, the only appropriate name that comes to mind for this market is disorder. We could call it chaos, but there is an order in chaos, disorder, on the other hand, is the opposite of order. While one can find an order, it’s not easy as in many cases the situation has to be viewed from opposite angles and pieces from each perspective have to be combined to come up with a new order. This is why we stated that his new hybrid bull had been designed to kill both the bears and the bulls. Bears and bulls have a mono-dimensional view of the markets and going forward this will not work. Hence, expect very sharp pullbacks that will appear as crashes as the Dow grinds its way to 36K; this will kill the bulls as they will falsely assume that bull is over. The bears will bask in the glory for a short time, and then 96% more will be destroyed when the markets reverse course as was the case with the short-lived coronavirus bear market.
One can see that short-term options are being manipulated at an extreme level. The DIA puts hardly gain value and even lose value when the markets pullback but drop like rocks when the markets surge. We have very little time left on the June puts; the markets would have to pull back very fast. However, if they don’t, we will recoup these losses via other plays.
Furthermore, do not get into options unless you understand the concept of all or nothing. One can lock in massive gains, but significant gains come with higher risks. There is no such thing as a free meal, and if you take something for free, the final cost will be 10X more. Only take (free) gifts from close friends that are giving it to you with the right intention otherwise offer to pay something even a token payment and get rid of the energy/debt obligation.
No amount of chaos seems to deter this market
And while some might say that is good contrarian signal, it’s actually not. A market cannot climb a wall of worry vertically without pause and if it does the ensuing correction is usually more potent. We monitored the situation as soon as the futures markets opened up (Sunday evening), and we saw enough action to reconfirm without a shred of doubt that this market is being artificially pushed higher. There is no point in discussing why or how, as it won’t change the outcome. Now the obvious conclusion to such blatant manipulation is to state that this will not end well? That is also wrong. What this blatant manipulation indicates is that the Fed is ready and willing to push this market to whatever heights it deems necessary.
This market is likely to experience a stronger than expected correction If the correction is delayed. On the surface, this analysis, while valid, is not entirely true. For, if one looks deeper, it will only appear strong because of the number of points shed. Here is an example we were expecting the Dow to test the 20,000 ranges, so that would have been a drop of 4500 to 5000 points. However, the Dow could trade to the 28,000 ranges and then drop to the 21.5K to 22K ranges which would represent a 6000 to 6500 point drop, but it would put in a higher lower which would be a very bullish development. So, in theory, it would look worse, but the pattern would be just as good if not even better than the first setup.
At this point, because the manipulation is so blatant, it’s pointless to develop a very short-term strategy, and the focus should be on the long-term trend. This level of manipulation is something we have never seen before but remember that no market can trend in one direction only. The Fed is already giving a secret signal that it’s going to force everyone to embrace this bull. Right now, both the bulls and the bears are confused which further reinforces our views that this new hybrid bull was designed to kill both the bears and the bulls and the Fed is pulling out all the stops very early into the game.
Hence, we are going to change our general game plan. The focus will be to embrace all pullbacks ranging from mild to wild for as this market trend higher it’s going to make less and less sense. And the only way to make any sense will be to focus on the underlying trend.
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