Every circle jerk has a beginning, a middle, and an end. This is neither the beginning nor the middle. Throughout this seven year fabricated delusion, important work has been taking place in the background to cannibalize the status quo for special dividends. Which will assure the most spectacular of endings, regardless of how boring and repetitive the interim proceedings...
IPO (junk) stocks are catching-up, which portends badly for this last rally...
The fact that the casino is 100% divorced from the real economy and from corporate profits is the primary indication of such an ending on tap. In addition, however, the global circle jerk has worked its way through every single risk asset class and global stock market since 2009. It has also worked its way through every U.S. sector, now culminating in 4x overvalued recession stocks.
That said, it has been the cyclically rotating non-stop short covering which has kept this bubble inflated for all of these past seven years. In other words we can thank serial skeptics for providing the fuel for keeping the last bubble from final imploding. Nevertheless there is a consistent pattern to this fabrication which the lamestream media has failed to notice. Focusing as they do, exclusively on the noise and not on the signal.
Short-covering, as indicated by gap up rallies, is heaviest at the beginning and end of each rally phase...
Per the rules of CasinoNomics, each rally "cycle" begins with short-covering, moves on to leadership stocks, then high quality, medium quality, then junk stocks e.g. revenueless Biotech and recent IPOs. Followed by some final short-covering, momentum rollover and collapse. There have been dozens of these cycles in the past seven years, but there have been three particularly brutal volatility cycles in the past year. In this current rally we're already through the revenueless Biotech/IPO phase. However, this last rally cycle has been extended by Japan's latest "stimulus", and by the new "all time high" in the S&P 500, unconfirmed by any other index on the entire planet.
There was a saying back in Y2K, that the dumbest people make the most money. Which was true, right up until it wasn't...
