Stock Market Update - Everthing is AWESOME!!!

And just like that, markets marched on like nothing happened.

Those paying attention know that these markets are mainly propped up by:

1. Central Banks creating money out of debt and buying assets.

2. Corporations taking on debt to perform stock buybacks and prop the price of their stock up.

3. Too Big to Fail (TBTF) banks quadrupling down with even more risk in the markets esp. as regulations are being pushed back once again and the precedent has been set that the government WILL bail them out (unless you happen to be Lehman).

That's it. That is the vast majority of today's stock market. How long they can keep this going is anyone's guess. As to what has been driving this weeks rally, there have been multiple reports in recent weeks that corporate buybacks are on pace for a historic year thanks in part to Trumps tax bill which seems to have freed up additional collateral for more debt which TBTF banks are more than happy to provide.

From a technical analysis standpoint, the markets are suddenly looking very bullish again. There has been algo buying at key break down levels and the downtrend has since been invalidated. The weekly and monthly charts are showing very bullish candles with long tails showing buyers coming back into the market. The daily S&P futures chart shows the MACD back above zero (bullish) for the first time since EARLY February.

Nothing seems to be able to sink this market. Gary Cohn's resignation was a big nothing burger. Escalating trade wars are irrelevant. Rising defaults in student loans, credit cars, and subprime auto don't seem to matter. Record debt across the spectrum doesn't phase this market. No one seems to care about the escalating tensions with Russia repeat warnings of nuclear war or rising escalations in Syria. Recent massive fluctuations with the volatility fund XIV and subsequent futures margin calls across a broad spectrum of trading firms are suddenly no longer relevant. Retailers closing in record numbers somehow doesn't matter because, according to today's jobs numbers, retailer are hiring as they are closing. Of course, we can't forget about the CENTRAL BANKS continued buying in this environment that no one seems to question.

This only shows the insanity in today's economy... it's beyond irrational exuberance now. We cannot say when this market will collapse but with this much systemic risk in the form of record debt across the economic landscape, we are confident in saying the market cannot correct without crashing. At some point the mounting defaults WILL matter. We just don't exactly when.

Bitcoin (BTC) is desperately trying to maintain support at the daily 200 period moving average at this time. Right now, the momentum is to the downside however. If Bitcoin cannot hold above 8100 and breaks lower, we could see Bitcoin below $3000 soon after. If it does reach those levels again, stock up because it we probably won't see it that low again in our lifetime.

Act Accordingly,

The Market Vigilante