A cursory Google search of news about the stock market at 11:30 this morning produced the following results:
It would appear that the gaslighting from the financial, political, and mainstream media all want to sell their positions to retail, aka, the bag holders right before the big finale. That is why there has been a non-stop push to “sell” the soft-landing scenario to investors. This opens up the question as to just what are the bears trying to warn everyone about?
Perhaps the search result below from Google Trends for the word “recession” might explain just a little bit of it.
That’s the masses, not those of us who news or economic geeks jacking those results up to much higher levels. And for that matter it is not the bears that have moved the sentiment indicators into the “Extreme Fear” level.
Thankfully for the used car salesman on Wall Street, it’s not at zero so there is still hope to pawn off the garbage buried in their balance sheet on unsuspecting “investors” who believe in a narrative and do not read financial reports.
The reality of what happened this past week is that the end of week bounce was anemic at best and potentially a long term change of market direction and perhaps trend lines should this activity follow through in the months ahead. If one looks at the charts of the S&P 500 and NASDAQ Composite, it would appear that the up move is the typical dead cat bounce one sees after an extremely oversold condition.
Thus far the 200 day moving average has held, but keep in mind historically, it usually does after the first severe sell-off before heading into either a full blown recession or financial crisis; sometimes combinations of both.
Volumes this week reflected what was confirmed in the charts above with the NYSE and NASDAQ volumes topping at 5.4 billion and 6.9 billion shares trading on Monday 8/5 respectively, and finishing the week with a paltry 3.6 billion and 5.9 billion shares trading hands. This defines the prototypical dead cat bounce as the market internals were nothing special either.
Perhaps A Historical Perspective Is In Order
In 1990 a recession began in July and markets confirmed it with a severe down move, ironically in August:
It would be healthy for the US economy to have the recession of the type which happened in 1990-91, however the financial engineering as the years moved forward have made the economic landscape even more difficult and dangerous. This is the crux of the warning that the bears have been trying to tell everyone about since the LTCM circus in the late 1990’s.
Even though Long Term Capital Management was bailed out 1907 style, the same trading activities they engaged in were continued by America’s large investment banks. When the handcuffs were removed in 1999 with Bill Clinton signing Financial Services Modernization Act (Gramm-Leach-Blilely) which repealed much of the Glass-Stegall Act, the insanity moved into overdrive, especially with the promotion of risky investments to the masses.
Hence the .com crash happens in March of 2020 followed by a period of economic and political instability, including a “fraudulent” election according to the Democrats, and all bets were off as to just how wild the year would end. Doesn’t this seem a tad familiar to everyone?
Next up, the Greenspan Housing Bubble and we know how happy of an ending that was for the world with the Great Financial Crisis as a result.
August of 2007 was the warning shot but the markets rallied in the belief that the Federal Reserve would never let the housing problem spiral out of control nor would the regulators in D.C.
The next period which highlighted economic instability and a major bear warning was in 2018 when the Federal Reserve under a new chairman, Jay Powell, was required to act after the market close on Christmas Eve with what became QE Infinity Wars, aka, the “Powell put.”
Thus here we are again, in August of this year heading into a contentious, bizarre election with economic instability in housing, inflation or outright stagflation, concerns about the consumer’s access to credit, a growing commercial real estate problem, and no sign of competent leadership within the halls of power of our nation.
No wonder Jamie Dimon seemed so concerned about a economic hurricane.
The bears are trying to send a signal to the market, but is anyone listening?
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