I have been traveling a lot the last couple of weeks, so a big ‘Thank You’ goes to Michael Lebowitz for ‘pinch hitting’ for me. This week, I just want to review a couple of things as we begin to wrap up 2017.
Earlier this week, I wrote a piece called ‘This Is Nuts.’ If you haven’t got a chance to read it, I suggest you do. It outlines my view on the current market extension in the short-term and the potential for a mean-reverting correction at some point in the future. To wit:
‘More importantly, a decline of such magnitude will threaten to trigger ‘margin calls’ which, as discussed previously, is the ‘time bomb’ waiting to happen.
Here is the point. The ‘excuses’ driving the rally are just that. The election of President Trump has had no material effect on the market outside of the liquidity injections which have exceeded $2 Trillion.
Importantly, on a weekly basis, the market has pushed into the highest level of overbought conditions on record since 2005. I have marked on the chart below each previous peak above 80 which has correlated to a subsequent decline in the near future.’
This post was published at Zero Hedge on Dec 10, 2017.