For once, Jim Cramer got something right at the start of the summer:
I guess the time will come when he rants again about how the Fed has screwed up is coming up soon.
Of course the regime is going to take credit for this rally and the temporary reprieve in gas prices as the propagandists for the junta have been out in force:
The problem with sugar highs is that when they run out, markets have a bloated empty feeling and all the gas is let out quickly as the mini-bubble pops again. Technically the markets exceeded expectations with this rally then again there has been scant volume to support it, breadth has been “meh” at best, and now the reality of high inflation is about to hit home.
And did I mention liquidity is going to get real thin also?
The truth is that the Fed indeed is engaging in Quantitative Tightening (more on that later) but the pace is so slow that it will not have any great impact on the markets until September. What will impact the markets now is reality; a sad reality that the Fed is going to continue to tighten interest rate and inflation will be substantial and persistent, the two enemies of every bull market in history.
As we enter the political silly season, this is going to be known as the era of “Peak Biden” which will coincide with the market bounce.
On to the current situation…
The S&P 500 has had a nice bounce but now the rally looks tired on the charts as I outline below.
The downtrend is solidly intact and this rally should start to fizzle with one more possible run at 4200 before rolling over very, very hard. Volume has been absent and with Europe on vacation the “panic” feel isn’t there although the smart money is still liquidating into every rally day.
The same can be said about the NASDAQ:
13,000 would be the absolutely top line of any more rallies probably then a roll over towards 10,000 is probably in the cards. And by “roll over” I mean crash as it will happen rapidly.
Enjoy the credit Senile Joe and to all the Bubblevision bulls enjoy your summer in the sun. No one appears to be paying attention anyways as the average Joe is just struggling to put food on the table and gas in the tank.