On March 11 we questioned whether the Death Cross was a valid signal of more downside to come [see: Is the Death Cross Really Deadly?]
…it’s possible that it will add to the bearish pressures on stocks. It’s also possible that it will mark a bottom.
Since then, the war in Ukraine has intensified, the Fed has raised interest rates, and inflation has worsened. Why then, did the market bottom on that day, rallying 7.3% since then? As we pointed out then…
It would be easier to be afraid of a death cross if the Fed and other central banks weren’t so involved in propping up markets – something they’ve greatly perfected since 2008.
The fact is that, despite the recent fed decision to raise rates a “whopping” 0.25%, central banks still largely control markets. They still suppress interest rates and volatility and still send wildly bullish signals to the algorithms responsible for 90% of the trading activity in equities.
The most recent campaign not only discredited the death cross signal, but has put ES/SPX within pennies of their 200-day moving averages and a bullish 10/20 moving average cross. The market will regain its integrity only when central banks walk away and leave it up to investors. Don’t hold your breath.
continued for members…
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |