Are markets setting up for a replay of last fall or we just drifting higher on hopium and coming successful central bank intervention?
I remember last September very well. All our technical charts were screaming sell, yet markets kept levitating higher. Everybody was screaming bullish, GDP growth was rising, companies were showering buybacks on the market and analysts were shouting over each other calling for ever higher price targets. Index price targets, stock price targets. $DJIA went on to make a new all time high on October 2nd following the $SPX highs in September of 2018:
Positioning for the fade was difficult, volatility was non existent and people voicing bearish opinions were viewed as absolute morons. I had written Lying Highs on September 2nd and my analysis looked dead wrong.
Yet it turned out to be the best selling opportunity since 2011. We all know what happened after that:
Why am I mentioning all this? Because here we go again in September and markets are drifting higher ironically from the same base as last year. 2900. We haven’t gone anywhere in a year, yet things are objectively worse than last year.
Growth is worse, earnings growth is worse, buyback growth is shrinking, as is capex and employment growth. What is different? Central banks