Rabu, 03 Februari 2021

Why the Market is Going to New All Time Highs

Money & Crisis

February 03, 2021

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Why the Market is Going to New All Time Highs

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Graham SummersDear Money & Crisis Reader,

As I forecast last week in Money & Crisis, the sell-off in the market was contained and stocks held their 50-day moving average.

StocksTrendHigherRemainsIntact_020321

Since that time a strong bounce has occurred.

The bounce has consisted of a clear breakout from the downward channel formed by last week’s correction (blue lines). As I write this Wednesday morning, stocks have been rejected at resistance (red line in the chart below) and are sitting just below their all-time highs.

StocksAreNowTestingResistance_020321

I expect we’ll see that line of resistance broken shortly.

Why?

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Because the market is returning to "business as usual."

The primary concern for the stock market last week was whether or not Wall Street remained in control of the financial system. Put another way, would the GameStop (GME) phenomenon, through which thousands of individual investors intentionally pushed a stock higher to hurt hedge funds, become the norm.

With the regulators cracking down on the GME scheme, it is clear that Wall Street has won this round.

I’m NOT saying that I like this situation, I’m simply saying that it is clear that the individual investors will not end up winning this war. (How can they with Wall Street having the regulators, the government and the entire system covering for them?)

Put simply, the craziness of GME is subsiding and the system appears to be returning to “business as usual.” This is what the large pools of capital were looking for in order to start buying again.

And buy they shall. After all, their compensation depends on it.

Best Regards,

Graham Summers

Graham Summers
Editor, Money & Crisis

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