We’re at the Tail End of the Relief Period for Markets…“Intrigued by gold and its price action.”

Sunday, February 28, 2016
By Paul Martin

by Christine Hughes
WolfStreet.com
February 28, 2016

I expected February to be better than January for the simple reason that January was so bad, and markets don’t go down in a straight line. Markets in North America were barely able to eek out a gain during February, and now I think we’re at the tail end of that relief period for markets.

Much of the recent rally has been spurred by short covering, which forces buyers into the market when they don’t really want to buy. Here’s what Morgan Stanley said today about short-covering by massive, computer-driven funds:

Quants have now covered for 9 straight sessions (days) which is the longest uninterrupted cover streak in over 2 years (period starting January 2014).

I’ve noted many times how the bond market has not confirmed the recent stock market rally. In addition, the amount of money participating in the rally has been pathetic as seen in our recent blog post here.

Furthermore, the sectors within the stock market that have rallied this year demonstrate a very defensive tone. Staples, telecom and utilities are the go-to sectors during bear markets and uncertain times. They are boring, reliable businesses that aren’t very tied to the economic cycle and they are rockin’ it. The charts below also show how the very popular and still heavily owned healthcare sector is not participating in the rally.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter