Tuesday, October 11th, 2016

What is the stock market doing ?

The stock market seems to swoosh past many investors these day as it clears the resistance of 200 day moving averages. Now investors are chasing the bus literally. It has gone past them quickly. Last year was no picnic in the park , but this year is turning out to be much fair to the bulls than the bears.

But when they came back from vacations and what not, and they saw the tail lights of the SPX as it moved up, they felt as if they missed the Bus. Its not that there are too many Buses running these days and one will come by soon.

So what they do now? Run after stocks and chasing indexes, that is what they are doing. At some point we’ll believe that this year may not be as terrible as the last one and get on board, but it would be too late for some people. They in fact would miss the bus.

The $VIX meanwhile has fallen constantly and is now below it’s 200 and 50 day moving averages. That means there is lots of complacency in the markets. Falling VIX is good news because the fear is gone from the markets but not entirely though. Any levels of VIX below 20 are good for stable markets. There is a good reason for the VIX to fall because the headlines that were driving these markets, specially the European headlines have calmed down and shut up.

As major indexes moved out and above their 200 day moving averages, they are now acting as support. The last major index to close above the 200 day moving average was Russell 2000 ( RUT ) and it followed the trend as lead by DOW and SPX since December 2011. At some point the market would reverse but again it may push higher.

So why the stocks are moving higher?

Its the economy ( stupid) as President Clinton would say. The US economy has solidly improved in the past sixty days and so. The job report in January added 200,000 workers back to payrolls, retail sales improved last December 2011 and the GDP came in at a nice clip. The Fed Beige book on Wednesday showed that economy has closed 2011 on a high upbeat note. Not everything is great, but still slowly improving. With these good news under the belt, traders are mentally poised to chase stocks higher.

Even though I have been sending you notices via emails and other means, it is not time to miss the Bus, get on board and make some money that you couldn’t last year because the market was difficult at best.

It’s amazing how the fears of double dip recession have now gone. It didn’t happen ! The market always comes back its the traders who don’t.

Its funny if you think the stock market will never come back, cause the skyscrapers of Lower Manhattan would be empty yawning buildings and no one will scorn and loathe Wall Street as the epicenter of greed.

 

 

 

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