The Fed’s FOMC meeting over. The Fed has removed the word “patient” from its verbiage concerning future rate hikes, so traders will have to find some other minutia to obsess over.
Speaking of traders, Wall Street has tried desperately to gun the markets. Stocks have been in rising wedge pattern since November. Thus far Wall Street has failed to generate the desired breakout. And they are running out of time.
The old adage “sell in May and go away” has a kernel of truth to it. Historically, the period from May to November has been a very weak one for stocks. All traders and trading models know this. If they cannot mount a breakout to the upside for stocks in the next two weeks, intense selling pressure will commence.
One positive for the bulls is that both the S&P 500 and the NASDAQ managed to eek out new all time highs last week. Unfortunately, the last time this happened was 1999, right at the peak of the Tech Bubble. We all remember what came after that.
As far as the economy goes, Fed’s own GDPNOW model shows the US economy growing a measly 0.1% in the first quarter of 2015. There will be loads of excuses ranging from the weather to who knows what, but the reality is that the Fed has failed miserably to generate any sustainable economic growth.
So… we have stocks bubbling right as they enter a seasonably weak period as the economy is rolling over. None of these things bodes well for the market. We believe stocks are actually putting in a TOP right now, to be followed by a 20%+ correction in the coming weeks.
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