Rallies After Bad Economic news

After all, most of the traders that are on Wall Street right now have no idea what it’s like to deal with an actual economy and the idea of inflation.

• It looks like the traders on Wall Street are rooting for more negative news, as we continue to see Wall Street look for handouts.
• After all, most of the traders that are on Wall Street right now have no idea what it’s like to deal with an actual economy and the idea of inflation.
• They still wait around for Jerome Powell to hold their hands and give them cheap money. The reality is that they are cheering for bad news because they believe it will make the Federal Reserve loose monetary policy.

It looks as if we are racing toward the 4500 level, and it is possible that we could break above there. Quite frankly, Wall Street was looking for a reason to go higher, and therefore the fact that they are extrapolating weak Consumer Confidence numbers with the idea that the Fed may have to slow things down makes a certain amount of sense, and of course, we have the JOLTS Jobs Openings numbers coming in at 8 million instead of 9 million, so therefore Wall Street is celebrating that inflation “has been conquered.”

I think this sets up for a little bit of disappointment, but quite frankly the stock market is thought of as the “beauty pageant” when it comes to financial markets. It’s not necessarily a situation that reflects economic reality, because quite frankly it hasn’t for years. The distortions created by the Great Financial Crisis, or perhaps more specifically, the reaction to it, we now look at stocks through the prism of liquidity, and of course, as more money flows into the markets, it makes people look for reasons to get some type of return. All things being equal, I suspect that we’ve got a scenario where the market is probably going to continue to be noisy, but at the end of the day it is likely that we will see a lot of choppy volatility, but I think that the upward momentum will continue.

If we were to break down from here, the 4200 level also features the 50-Day EMA, which of course is an area that will attract a lot of technical traders. I don’t see that happening anytime soon, and of course, we have to pay close attention to the non-farm payroll numbers coming out on Friday which will have a major influence on where we go longer-term.

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