With signs of economic recessions becoming more obvious by the day, panic Fed engineered one of their biggest ramp job on Monday pushing the stock market up all day, running over short-sellers.
With QE4 perhaps coming in not too distant future, look for the frequencies of their ramp job to accelerates going forward. How long will the effect of QE4 last, there is no way to tell, but it should be short-lived, as the power of the market will overrun and humbled central bankers.
As shown below, in a number of cases over the past century, a bear market in U.S. stocks was well underway long before a recession had been recognized and confirmed by the Fed. This is why waiting for the confirmation of a recession, before taking actions to protect investment portfolio, will likely too late.
With the economy now more than 6-years into an expansion, which is long by historical standards, the question for you to answer by looking at the above charts.
“Are we closer to an economic recession or a continued expansion?”
How we answer that question should have a significant impact on our investment outlook as financial markets tend to lose roughly 30% on average during recessionary periods. However, with margin debt at record levels, earnings deteriorating and interest rate spreads narrowing, this is hardly a normal market environment within which we are currently invested.
Key price level for NQ on Tuesday will be 4400 resistance.
-- If NQ is unable to break and stay above 4400 look for NQ to either trades sideways or selloff, with key support at 4350.
-- If they are successful in pushing NQ above 4400 look for some shorts to cover.
