Absent from Financial TV is the fact stocks stage bullish breakout as the US election results linger.
Skeptical that stocks can rise further has left investors stuck on the sidelines.
That’s a recipe for disaster!
The market does not care what investors “think” about the direction of prices. In the end, the stock market is a voting machine. Buyers and sellers determine the price. Much like how a ballot determines the outcome of an election.
As for the stock market, the bulls are off to the races. Cash on the sidelines is a strategy doomed to failure.
In the meantime, zero interest rates engineered by the Federal Reserve’s Quantitative Easing program continue to fuel the stock bull market rally.
As the same time, bond investors are jumping ship faster than a one legged pirate.
Take a look at the S&P 500 “weekly” price chart below. Look at the “bullish breakout” stocks staged this week.
S&P 500 Weekly Chart: Bullish Developments:
- late August higher breached to the upside
- Monday November 9th rally was the real deal
- Cash continues to flow into stock market
Conclusion
In other words, stocks are the only game in town.
Interest rates are “locked” at zero. Not surprisingly, investors have abandoned short-term lending markets because there is no incentive. Interest rates are zero.
At the same time, bonds offer investors an attractive price, or offer. As rates are pinned at zero, the bonds price has peaked. As a result, every pension fund is looking to unload their bond portfolio. Who can blame them? Conveniently, the Federal Reserve’s Quantitative Easing program is a willing buyer at any price.
In the final analysis, cash is flowing out of the bond market and “as quietly as possible” its making its way into stocks. The name of the game is a return greater than inflation.
Maybe the COVID-19 pandemic will upset the apple cart. But for now, stocks continue to rip higher.
Weekly charts help filter out noise. To be clear, stocks stage bullish breakout this week. There’s no arguing that fact. So don’t fight the market.
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