Stocks are living in a fantasy world.
The S&P 500 continues to trade in a range. The bigger picture shows the index forming a sloppyg Head and Shoulders pattern. If we take out 2,000 we’re going to 1,800 in little to no time.
What will trigger this is difficult to say. The most likely candidate is the US Dollar. Many analysts talk about the US Dollar being in a bull market… but they’re failing to see the big picture component here.
The US Dollar is breaking out against EVERY major world currency.
This is not some blip on the financial radar. The US Dollar has been trading sideways for several years. But in the last 8 months, that all changed as the US Dollar broke out against the Yen, the Euro, the Australian Dollar… literally everything.
This is a seismic shift in the global financial landscape. And it is just the beginning. Globally investors/ corporates have borrowed over $9 trillion worth of Dollars and used this money to fund other projects.
To put that number into perspective, it is larger than the economies of Japan and Germany COMBINED.
ALL of these investments are now beginning to blow up. ALL of them. It is not coincidental that when the US Dollar began to move aggressively, OIL, COPPER, EMERGING MARKETS, and the like all IMPLODED.
The one hold out has been US stocks… but this won’t last much longer. Any company that relies on a cheap Dollar for exports will get crushed. Indeed, this is already happening: over 87% of companies have lowered guidance for 2015.
The Fed is no longer engaging in QE. Profits will now be the largest drivers of stocks. And profits are collapsing.
The stage is set for a market collapse.
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Phoenix Capital Research