Short post today - and no chart, either (smile).
My gut feeling on markets is this:
- Everyone knows we are in a bubble of historic proportions,
- Everyone knows that retail is in the market in a big way, particularly the "Young And The Clueless" who treat markets as video games.
- The market is now purely a momentum play, fundamentals are out the window.
- A huge percentage of the market is ruled by algo, flash, passive and index tracker funds. All combined they represent over 60-70% of the market. Perhaps even more...
- Discretionary/alpha investors are not selling yet because they are too scared of under-performing.
- However, everyone has their finger hovering nervously over the "sell" button.
Given the above, it seems to me that when/if the market turns, what would in the past have been a normal correction may now end up as a stampede, as everyone rushes for the a very narrow exit door. After all, momentum works both ways.
Having said that, I also get the gut feeling that the market is being "supported", both factually and openly (Fed printing trillions) and, perhaps, operationally and quietly on a play-by-play basis. It feels as if the market is not being allowed to correct, and every drop, however small, is immediately pushed back up.
And all of the above, plus a couple of bucks, will buy you a coffee (big smile).
PS As luck would have it, shortly after posting the above Bitcoin experienced a sudden, completely unexplained collapse that saw it plunge from $53,00 to $48.000 within literally minutes and then bounce back. OK, so a chart, after all :)
It does feel supported. Same feeling about it being pushed back up every time. It's as if it's become illegal for stocks to go down Lol.
ReplyDeleteAt some point, however, even that support goes away. I've seen it happen and when it does it's as if a trapdoor opens...
ReplyDeleteJudging by that chart, there is a finger over the buy button. At least in BTC.
ReplyDeleteIf everyone thinks there will be a correction, the correction is the last thing we will see. We still need to draw in all those people trying to wait out the inevitable correction. As soon as they capitulate and buy back in, then we can crash.
Anyway, ya this feels like early 2007 when the market was levitating, CDS's refused to trade to reality, ZeroHedge was complaining about the PPP, etc. Erie times. Stay nimble out there.
The sharp drop happened in just minutes, which tells me that the BTC market is very, very shallow, also known as hollow ie there are no sizable bids behind the current bid-offer quote. The seller had to reach all the way down to unload his position, causing others to immediately also unload. Anyway, today BTC is back to yesterday’s lows around 48.000.
ReplyDeleteMy opinion is that the bubble will pop starting at its extremes, and BTC is one of them. I think it is happening now..