The equities market is on fire. Thank you Fed. Thank you earnings. Thanks… whatever. Who cares? The market is strong (data is mixed behind the scenes, of course) and it’s been a good time to participate. Trying to call the top is dangerous to ones account – stay out of that business.
Looking back, I mentioned that the consolidating triangle within a rising channel was worth watching on the SPY daily:
— Ryan (@dayjobtrader) October 14, 2019
Fast forward to today and you can see the obvious breakout through the top of the triangle (orange line) and run:
Not only did SPY get through the triangle, it also shot through the top of the long term, uptrend channel. That’s impressive. A little sideways action this week would be ideal as the market continues to digest earnings season.
To reinforce the message of market strength, check out this tweet comparing where we are this year vs this time last year:
NASDAQ New Highs-New Lows was sitting at -182 (significantly below zero) on October 8, 2018. Friday, the same indicator closed at +142 (significantly above zero). Today looks significantly different relative to October 2018. $SPY $SPX $QQQ pic.twitter.com/rcVIkf0qjz
— Chris Ciovacco (@CiovaccoCapital) November 3, 2019
Lastly, don’t fight the Fed. We say it all the time, but it can’t be stated enough. It’s very dangerous to short a market that’s being backstopped by the Fed. Take a look at this illustration of the S&P 500 vs Global Money Supply (liquidity):
Just to put things into perspective: S&P 500’s All-Time High mainly driven by fresh liquidity of global central banks. Fed has expanded balance sheet >$4tn. Global liquidity has hit fresh high at $75.9tn. pic.twitter.com/233pYSF0or
— Holger Zschaepitz (@Schuldensuehner) November 2, 2019