Friday, June 18, 2021

#USStocks Review

US Stocks Review

Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bagholders of trend transitions.

The global economy and stocks began behaving strangely in late summer of 2019. Repo rates spiked unexpectedly. Few acknowledged it. Anyone looking for a return to "normal" market by fundamentals will likely be disappointed in the coming years.

Stocks crashed in early 2020. Relative performance within the stock market suggests a reallocation of resources away from old to new economic plays. The old norm of "Made in USA" is not coming back. Manufacturing, design, and information collection will be borderless. Citizens will struggle to maintain their liberties and rights without oversight and intervention under this economic backdrop.

Rising stocks as the global and certain market groups decline is a real possibility that has been discussed for years. The stock market's distortion of reality is being attributed to the Federal Reserve. The Fed, contrary to popular opinion, is not that powerful. It cannot control the world's capital flows. The invisible hand, the true driver of market and trends, is redefining the world as the core economy passes from North American to Asia.

Subscriber Comments

Dow Industrials Daily

The recent decline in US Stocks should not be a surprise to anyone following the Matrix.

Subscribers know the risks are high. Dividend 1-4 and 1-6 mean cycles, 1-4 mean cycle can point secular transitions (see Dividend Yield 1-4 Mean Cycle). The Dividend Yield 1-6 is even more scary (see line 113 Trends tab of the Matrix). The majority might be bullish because everyone else is, but the invisible hand recognizes the risks of -2 sigma extremes.

In addition to dividend yields, sentiment is also extremely bullish and concentrated. Weighted Average Sentiment, an adaptive measure of sentiment towards stocks, is above 1 (see WASo). Readings above 1 are extremely rare, and suggest everyone is bullish. If everyone is bullish and fully invested, who's left to buy?

The majority's tendency to rationalize their positions against the invisible hand, means none of the trends matter until it matters. That is, until the public starts losing money. Dividend yield cycle means, and sentiment can have long lead times.

The long lead times generates complacency at tops and bottoms. Subscribers are never complacent. They understand and follow Dividend Yield Cycles, Sentiment, and long lead times. They also know, or know now, when the Composite Equity DI is flagged as a bearish setup by the computer, there's a high probability that the long lead times will shorten very quickly, and the bulls will be slaughtered (see Composite Equity DI).

Dividend Yield 1-4 Mean Cycle (Trends tab line 113)

Weighted Average Sentiment (WASo) (Trends tab line 113)

Composite Equity DI (Trends tab line 61)

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