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Goldman’s Clients Just Want To Know One Thing: ‘When Will The Rally End?’
Well here we are, another week gone by without a hint of fear or trepidation from a market that is Teflon.
Actually that's not entirely true. There was a short-lived hiccup as Asia passed the baton to Europe on Thursday. The Hang Seng tumbled out the blue and the tension between Madrid and Catalonia came to a head. But all was well by the close and thanks in no small part to a renewed bout of optimism on tax reform in the U.S., investors were not only no worse for wear, but in fact sent merri
In the big picture, this isn’t close to over yet.
Technically it’s strong. Dow closed at new highs in terms of all major currencies on the weekly, very bullish.
And on the daily, it has broken above its upward channel with follow through. Bullish.
Look at the global capital flows, with money abandoning europe for a safe haven as people are unnerved by the european response to catalonia. Italy next? The shine that has been europe all this year is in danger of becoming tarnished again, and if so, money will flee and must go somewhere. For the perceived safety and US enabling of foreigner tax evasion, international money likes to park in the dow & treasuries – but treasury bonds are unattractive with Powell coming down the pike.
As I wrote earlier last week, Dow looks to be headed to 23.7K in this leg and ultimately at least 30K.
The time to favor foreign assets was put aside for awhile at least.
Of course bitcoin remains bullish for similar reasons: strong chart & momentum, capital flows, tax efficiency, privacy.
Carry on.
I think the rally ends this month……..too many bulls, too much debt, asset prices too high, and a decelerating economy.