Ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo.
The term dead cat bounce is market lingo for a "recovery" after markets decline due to fundamental reversals. Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to "buy the dips" once again buy the decline, and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.
I submit that the past 9 years of market "recovery" is nothing but an oversized dead cat bounce that is finally ending. Here is a chart that depicts the final blow-off top phase of the over-extended dead cat bounce:
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Even a blind squirrel finds a nut on occasion.
ReplyDeleteThis guy has been calling for a correction forever. Now we finally get one and he's vindicated.
It's all about interest rates and investors chasing yields. Now that yields on low risk assets finally have potential to reach par with riskier asset classs, money will start to migrate to safer places.
This ain't rocket science.