Don’t fall for the Stock Market Rally, New Crash Formation is Made
By: Anthony Cherniawski
Jan 02, 2013
Insanity has reached new heights. SPX has risen this morning to challenge its massive Rising Wedge formation at its very apex. At the same time, it has formed a new Orthodox Broadening Top nested within the original formation. There is no doubt in my mind that the markets are headed for disaster.
The buy-and-hold investors have to be ecstatic. Everyone must be all in by now, and levered to the hilt. The only segment that is laughing all the way to the bank are the HFT companies that are in cash by the end of the day. You simply cannot outrace these guys. At this time, the upside is miniscule compared to the massive downside risk.
That the stock market is manipulated is no longer in question. One explicit goal in the Fed’s zero-interest rate policy (ZIRP) is to drive capital into risk assets such as stocks. That is a first-order, transparent policy of manipulation, i.e. a centrally managed policy aimed at managing markets to meet a key central-planning goal: creating an illusion of prosperity via an elevated stock market and the resultant “wealth effect” for the 10% who own enough stocks to matter.