Dow Jones

My day is not finished if I  do not consult the spirits on the direction of our little trading god, the Dow Jones. Hoovering around 17 000 points, spiking a bit just to come back to base have been the trend lately. I can not help but wonder at the sheer hunger for this market to go up. Once whatever reasons for selling seem to be over, the rate of the upward move has been amazingly strong, sudden but not powerful. Any other bad news sends it back towards its humble 17 000 mark.

What can we make of these aggressive moves on both sides? As these undecided traders who keep on coming in and getting out faster that Donald Trump comes in and out of breaking news, I suspect they will get tired of transaction fees and end up giving up the ghost. Dont know if I can say the same for....Mr D here.

Traders will end up waiting longer on the sidelines to see what's happening and that will of course mean they are selling and not buying in the short term, bring a 15% deep in the Dow from its all time high. Then, there will come again that buying opportunity that investors love.

This churning within range, to me, says that the market is overvalued and investors are buying time at these levels for earnings to catch up with the trigger happy traders who have long anticipated a much better earnings scenario. Should the stronger dollar, weakening China and emerging markets take a real toll on corporate earnings in the US, investors will lose it and sell off even up to a 30- 40 %  decline off the all time high.

Americans continue to defy economics just like the Chinese government and they are literally speaking economic growth through a Fed statement. Well, of course the Fed is good at manufacturing things that do not exist yet. Take for example QE and its compliment, the fractional reserve system that creates non existent dollars. Corporates have also engaged in this orgy and created this bubble of a market in denial.