In 2008 the banks were Too Big To Fail. Here in 2020, the stock market looks Too Big To Fall.
So much of the status quo is now dependent on ever-higher asset prices that any weakness is immediately met with overwhelming support by the central banks and/or national legislatures.
Many are now wondering: will stocks ever be allowed to drop again?
While that question sound facetious, it’s not. After a decade+ epic run-up in the markets, capped by the past year-long melt-up to levels of price over-valuation never seen before in history, there are practically no bears left on Wall Street. Having been burned for so long, they can’t afford to remain contrarian.
Everyone is now on the same side (long, baby, long) of the boat:
Of course, it’s at lopsided moments like this when major reversals catch everyone by surprise, warns this week’s guest expert and master technical analyst, Sven Henrich.
Sven regards the markets today as nothing less than a “circus” where a never-ending parade of distractions and rumors serve to divert our attention from the underlying horrible technicals and anaemic fundamentals.
In the video below, he walks us through the key technical indicators he’s tracking mostly closely right now that suggest a massive reversion to the mean from today’s distorted highs is a major risk. Can things still go higher from here? Absolutely — but unlikely for much longer, especially with such a contentious US presidential election looming.
For Sven, the future is all about calculated risk/reward probabilities. And he sure sees a lot more risks right now for investors than he does continued upside return:
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We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.
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