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The Fed's Juicing the Market This Week… But What's Coming Won't Be Pretty
The markets are roaring higher today based on two items:
1) Today is a Monday… which trading algorithms have been programmed to expect will be an “up day.”
And…
2) It’s options expiration week.
Regarding #1, there is no real reason for stocks to move higher today. The recent data shows that Bloomberg ECO U.S. Surprise Index is collapsing at a pace not seen since 2009 (when everyone thought the world was ending).
Aside from this, the PPI data showed that profit margins fell in a number of industries. And of course, there’s US retail sales falling in February: the third straight down month.
Negative economic surprises, falling profit margins, and collapsing retail do not point to a strong stock market.
Regarding #2, options expiration week is the Fed’s favorite week to provide Wall Street with additional liquidity so the latter can manipulate the market to shred
as many options contracts as possible.
This is not conspiracy theory. Consider that technically ALL Fed QE programs ended in late October 2014. And yet, since that time, the Fed has made LARGE increases in its balance sheet (swapping liquidity for assets) on every single options expiration week with only one exception.
Weeks in which the Fed’s balacnce sheet shrunk are red. Weeks in which it expanded are black. And options expiration weeks are highlighted in gray. Note that the largest expansion moves per month occurred in options expiration weeks with the exception of February.
So this week will likely feature another large Fed balance sheet expansion as the Fed provides a money pump to Wall Street so the latter can gun the market to insure the greatest number of options contracts expire worthless.
This is the short-term scenario. The longer-term scenario is that the market is prime for a sizable collapse. The single biggest driver of stocks is earnings. During bubbles, sharp divergences can emerge as earnings begin to roll over and stocks move higher… but inevitably, stocks ALWAYS drop to close the gap.
With that in mind, take a look at the below chart. The divergence between stocks today and EPS is even LARGER than it was during the 2007 bubble!
Stocks can gyrate this way and then in the short-term. But in the longer-term, we’re set for an epic collapse. This bubble will burst as all bubbles do. And when it does, it’s going to catch 99% of investors by surprise.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
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Printing worthless money is good, compassionate, just, loving, caring. It buys peace, helps the poor and keeps evil away. It's what religion preaches every Sunday... peace on earth, goodwill to all men. No harm is being done. Let it continue forever!!!
my roomate's step-mother makes $79 hourly on the laptop . She has been fired for 10 months but last month her pay was $18694 just working on the laptop for a few hours. see here... www.globe-report.com
The Blue King commands the market up! Don't defy the Blue King!
Actual, he doesn't look a thing like his momma.
its a BULL shit market!
Phoenix Capital's Company Motto: "Even a broken clock is right twice a day"
There will be no crash this weekly crash article is meant to sell gold period. Now when they get Putin to start WW3 then the whole world will burn. Look at DEFCON.com we now at 3 over Crimea and now we blockadeing the area till its reunified start looking for mushrooms
"Epic", eh? For real?
Sell? To who?
I keep reading about this "collapse," and wonder why it hasn't happened, yet. In my research, the FED has to invert to force a market sell-off, and you can't find a Bear Market without the inversion occurring, first. I've taken the research through the beginning of the FED's existence, and it's there for anyone to see...even the Great Depression sell-off required an inversion, so, no inversion, no sell-off. I do know that the Bear markets have become much more dangerous as more cash floods into the system. I think the Founders had it right, we should never had allowed the Progressives of the Wilson era to start a national bank, create a massive Income Tax structure or change how US Senators were elected.
Inversion, I'm intrigued. Please explain inversion of the Fed.
+10000000000000
show us an audited record of your trading over the last 5 years...klowns love to laugh.
They'll just change the calculation for p/e! LIKE "forward operating earnings" has become accepted. IWM sets all p/es over 60 to 60, on and on. Legal FRAUD.
You are 1000% right, they simply move the goalposts when they can no longer manipulate the number any longer. Look at U-3 unemployment or CPI methodology and all the times they have changed the way they are calculated. If your stock price doesnt go up enough you actually get kicked off the Dow Jones Industrial Average.
Keep working at it Graham - you'll eventually be correct (after almost 7 years of trying).
Reality need not apply. We are taking on water faster than we can bail it out, so the Fed's answer is bigger buckets...with holes in the bottom. We're sucking in panic money from the rest of the world so the music can never stop.
Chicken Little ...
Never has the difference between rookies and pro's been more apparent than in this bull market.
Most actual pro's I know have LOST money in this run. Most for the same reason actually: they see their interests and the markets as aligned.
When the market moves against them "its the market's fault."
Oil specifically but energy in general is in fact liquidity. The volume since the collapse has been VERY heavy...which since this is real money attracts the trading set.
That's a REAL skim.
The bid/ask in oil right now is MASSIVE.
Some say eighty, some say twenty. Right now there is no middle ground and we're going into Spring.
Already Summer in the Upper Midwest.
That of course is where all your production comes from...
"Stocks can gyrate this way and then in the short-term. But in the longer-term, we’re set for an epic collapse."
Been hearing that for six years. If six years is short term, what is the longer term 100 Years?
..
This Longer Term stock market has been going up while PM's took a nose dive into the cellar where they've been hanging out for the last 4 years. What will change? Hint; NOTHING! Not until key individuals go to jail. Certainly won't happen on Obama's watch. This can all go on easily for another 1.5 years while we have Negroes in key government positions. Nuff said.
With more and more countries leave the World Corrupt Bank & IMF to the China Bank, U.S. will be squeezed. As no one will trade U.S. dollars, because they know they are worthless.
"This can easily go on for another 40 years while we have Democrats and Republicans in key government positions." There, fixed it for ya.
Congratulations! You got the pole position by being diligent in some sort of way? Then squandered it by ending your post with a really stupid sentence at the end. Lobotomize much?
It wasnt a stupid sentence. Look at anything controlled or run by blacks and its a complete mess.
Actually, F16 didn't squander it totally. The cabinet is being run in most aspects by what amounts to something resembling an African Marxist dictatorship, so I wouldn't necessarily toss it all...
Don't come here and and call a spade a spade. You will get stomped into oblivion.
But diss a Joo, your a fucking hero.
Obsolete farm implements.
Prove me wrong.
...because whitey's been doing such a spectacular job with the banking sector.
Would those be
ACTUAL or METAPHORICAL knee grows?
Would it matter either way?
Actual, he doesn't look a thing like his momma.