Wednesday July 8, 2015 7:57 AM Central Standard Time
When markets break down through a previous support level often there will be an attempt to move back and re test that breakdown. That appears to be the case for the surprise rally yesterday. Like the Chinese government buying stocks, one suspects our FED was trying to buoy the market. But this morning that 100 point DOW rally has already been erased. This looks to be an interesting day.
That seems to be what happened yesterday. Notice how the index cam right back to 17776 while the 200 day MA is 17692. Already in pre opening trading the DOW is back under the 200 day MA at 17,538, falling as I write
A reader has questioned my definition of deflation. Well this is a blog about markets rather than macro or micro economics. When I struggled as a would be broker (as did all the brokerage firms at the time) in the 1973-74 50% meltdown, I coined my 'black Hole' description of markets. If one stock drops say 2% in one day on the trading of a fraction of all shares for that stock, the reality is that the price of all shares dropped. It is as though the Magic Hand has reached into all portfolios and removed massive wealth literally over night. Market Value has disappeared down a Black Hole. That is now happening in every major stock index in the world. it is also happening in the oil market where massive amounts of debt have ben built up the last few years. This will make it all the more difficult to pay that debt with prices falling to near break even levels for many producers.
Call it what you will but when stock prices decline world wide, wealth is disappearing.
Chicago , a Greek Echo Which reminds me, when we visited Truman Community College some twelve years ago, officials admitted to me that they did not know literally how much money was in their bank account. All of this poor management is not becoming apparent. Hmm, Puerto Rico too!
It's just not inflation/deflation. They are very specific terms.
Posted by: neil master | July 08, 2015 at 12:57 PM