Friday, April 15th, 2016

Stock market is Pavlov’s dog

The description couldn’t be better as Scott Blier founder of create Capital says “ Ben Bernanke is like Pavlov and Wall Street is like Pavlov’s dog”. The dog is trained to respond the way the master rings the bell. As long as Bernanke is there to pick up the pieces, the market is there to respond and maintain its levels based on hopes. This is seen time and again. Since the US economy is improving the dog is fed with hopes and can survive.

The troubles stemming from Europe are hounding the US markets. But in the presence of Bernanke, the market knows he will be there to pick up the pieces and help the markets. This relationship between Bernanke and and the market is symbolic.

This Fed inspired market is in a trading range, knowing if things go sour, we will be rescued, as it happened in the last 3 years and you have seen lots of it. Scott Blier goes on to add “Stocks prices are illusory. As long as Ben Bernanke is there to pick up the pieces the market can maintain the 11,000 to 12,000 trading range “

On Tuesday Feds gave the market vague promises and the market fell off the wagon. These disappointments is not what the market has come to rely upon. But the stock market knows if things got worse, the Fed will intervene and feed us again.

Than there is the question of lower trading volumes which are indicating more and more smart money on the sidelines. Scott Blier adds “It’s scaring everybody away…keeping good money on the sidelines,” he says. If you like what you see above, please sign up for deeper analysis and trading strategies by using the Register button here.

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