E Market Briefing For Thursday, June 18

A large measure of support - sustaining this market move, came from the Fed, and while welcomed, creates an environment of excessive complacency by the long-side holders who grasp the involvement of the Federal Reserve here, while it also traps traders into a trading-mentality (of high level swings) which remains unlikely to be sustained all-the-way into Elections, without interruption. Today of course was a good example, as we got essentially a down-up-down day. If they freak at simply having a down day, I'd hate to imagine reaction to a real drop.  

It is an Expiration week and on-top of associated volatility, you effectively have China's capital Beijing shut-down, sending its own messages to markets there and globally, as realization of a COVID-19 resurgence takes-hold amidst deniers of reality in some countries. And yes that makes some rallying dubious, while not the case in areas that 'benefit' from perpetuation of pandemic concerns. It also puts pressure (or should) on reckless investing, or reckless gatherings, as it infuriates the medical teams that are barely recovering from the last ordeal.  

Executive summary:

  • Yes the Fed has supported, and increasingly inserting itself, into markets, so in a sense you can get 'too much of a good thing', as I'll delve into a bit.
  • However, the ascent of permabear visibility just because we get a decline for a day, suggests equities will not surrender on a time, just to fit their time.
  • Nevertheless extreme market valuations (an asset bubble in 'those' stocks only, not the broad market, and that's the key) are ahead of a shakeout, but it's also just ahead of 'Quadruple Quarterly Expiration' coming right up.
  • That gives us limited downside by comparison with historical declines, even as S&P is above our targets (having nailed the February/March drop, and then the March 23rd low), and again because 'the market' isn't a bubble, a sector of stocks, that happen to be the capitalization leaders, are bubbly.
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Karen Klein 4 months ago Member's comment

Good report.

Gene Inger 4 months ago Author's comment

Thanks Karen- this is about half of it; as voice-over-video charts and more technical comments are in the 'Daily action' portion NOT provided in these excerpts. I welcome you to join our full Daily Briefing by subscribing at www.ingerletter.com... cheers! Gene

Noah Pomerance 4 months ago Member's comment

Do you think that the NYSE is acting on a buffer, and will fall drastically once again after the realization of what is going on in China?

Gene Inger 4 months ago Author's comment

Yes Noah, I discuss China in many reports and videos and portions of the Daily Reports you don't see in these complimentary excerpts. I welcome you to join our full Daily Briefing by subscribing at www.ingerletter.com... cheers! Gene