After US equities went limit down overnight when the election was called for Trump, we’ve seen an absolutely face melting rally to the upside. These all time highs (or thereabouts depending on which index you’re looking at) are brought to you by the Plunge Protection Team, the Federal Reserve, the Exchange Stabilization Fund, and high frequency traders. My initial hunch this morning was that this is for the purpose of giving institutions an opportunity to get short after being caught on the wrong end of the election. Perhaps it’s simply a momentum algorithm driven spasm. Even more unlikely is the hypothesis that the interpretation of the fundamentals has changed and that now everyone and their mother’s computer program believe that the Trump presidency implies unfettered bullishness.
In any case, these massive swings are an indication of potential future price dislocations. When we see huge wicks like the one on the daily candle here, we typically revisit the ends of those prices. In this case, that principle would imply a trip back to around 17,500 in the Dow. This can happen rapidly, but it doesn’t have to…
Far more important is the hard selloff in the bond market. Word is that China is dumping US Treasuries. On a weekly basis we’re breaking through a multi-year trend line that has served as stable support as the Fed and other central banks have gobbled up more and more bonds and the world has gone deeper and deeper into debt. If we’re witnessing an opening salvo in a structural change to the trends in bonds, then the real fireworks are right around the corner. Remember, when bond prices go down, bond yields and core interest rates go up. Risk assets of all categories across the globe change in value based on these rates, and they are tied to the largest pools of derivatives. In short: the melt-up to all times highs may be cold comfort if the turmoil in bond markets continues at this accelerated pace.
For more color on the situation, take a listen to Gregory Mannarino from earlier this afternoon:
If you’re unfamiliar with Greg, you can check him out on the second hour of a recent episode of Hagmann & Hagmann:
Gregory Mannarino – Bio:
Greg is an independent trader, contrarian financial analyst, wide awake author, and content creator based in Las Vegas. Greg was born in Brooklyn and has retained his street smart attitude in his approach to both trading and the current state of world affairs. A veteran in the field of finance, Greg has decades of experience dating back to his time at Bear Stearns prior to the dot-com bubble.
Home base for Greg is at TradersChoice.net (TradersChoice.net). He also maintains YouTube channels that are active on a regular basis releasing general daily commentary (MarketReport), focusing on the details of technical trading (The Evolution System), and informing traders about how to approach options (TradeGame). Greg has recently released his technical trading playbook called The Evolution System as well as a guide to day trading. Both sets of materials are available for download on Lulu (Gregory Mannarino – Lulu) and are self-published.
Greg’s materials are broadly accessible to everyone, and short term traders – from the aspiring to the experienced – are the ones that can glean the maximum amount of information and utility from his efforts. His website features a free live chat where traders can exchange ideas and discuss a variety of topics, and the systems he has released are geared towards people with direct experience in trading or who want to become involved. While his big picture perspective is that the financial system is a massive, bubble driven Ponzi scheme that will inevitably burst, Greg follows his trading system as a disciplined veteran and has no qualms about making money when prices go up. Flexibility is crucial for short term traders, and Greg’s ability to communicate the core principles of success necessary for extracting wealth out of stocks, options, and other financial instruments makes him a stand-out in the economic truth community.
A prolific video producer in his own right, Greg is a regular guest on USA Watchdog with Greg Hunter and has appeared on a plethora of truth-directed media outlets: InfoWars, Pete Santilli, FutureMoney Trends, Caravan to Midnight, SGT Report, Zero Hedge, and the X22 Report among many others. Greg’s material has been published across mainstream financial outlets as well.
One of the most unique themes that Greg emphasizes is that the self-destructive monetary system and central bank policy has created bubbles not only in asset classes but also in the size of the human population itself. Debt is a financial mechanism that pulls resources from the future into the present, and the expansion of a global, exponential debt bubble has stolen such vast amounts of capital and energy from the future that it had engendered a simultaneous, exponential increase in human population. Greg often reiterates his view that when the current financial bubbles burst the “Biblical” consequences will spill over from the financial realm and into the human population generally. When the system supported by debt finally fails, the population that the system has supported will also no longer be sustained (Global Debt and the Human Bubble & USAWatchdog – The Human Bubble).
While Greg is primarily known for his market analysis and his trading expertise, he also has a medical degree and attained the rank of Lieutenant in the US Naval Reserve Medical Service Corps. Greg is a lively, congenial analyst with a charitable spirit and wants nothing more than for as many people as possible to become informed and take actions to solidify their financial future. He is an advocate of holding physical precious metals, particularly silver, and regularly implores his audience to “become your own central bank” and to “bet against the debt”.