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The Stock Market is Still Stuck in the Mud

The usual suspects have been on the bubblevisions projecting a “new new” bull market and at the same time, others pushing that the end of the world bear market is approaching. Yet right now, there is no commitment in either direction. Since the last week of March, there has been no real volume in US equity trading, no directional discernment visible, and only isolated stocks rallying higher or crashing down further.

Meanwhile the hucksters are gonna huckster…

Next up, how to invest in BBBY as it goes through bankruptcy. Penny stock shows on CNBS are a given any day now.

The credit markets, which are flashing warning signs, do not seem to be providing an impetus for the markets to move. In the short term, or at least through this summer, the inflationary forces which have been distorting the US economic outlook are still in control, probably until at least the August-September time frame. However, the recessionary warnings and behavior of the smart money in the bond markets hints that a disinflationary outcome is likely with a major threat of outright deflation by Q2 of 2024.

The chart of the S&P 500 for the last 20 months says it all:

Other than a few attempts to rally back above 4200 and crash below 3800, the market is truly at a loss for direction. There are a handful of stocks holding the indexes up in total, but the long term outlook for equities appears to be very, very dire. In the weeks ahead as earnings season winds down, there could be a mass exodus from equities starting this month but truly peaking after May 10th through the week before Memorial Day.

The one proprietary technical indicator I use has had a 75% hit rate so if it verifies again in a few weeks, 3200 on the S&P 500 could become the new 3800 in very short order.

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