Markets can seem exuberant, sometimes, even over-exuberant, as has lately been the case, without reason.
The current environment is one of those times by which market movements cannot be rationally explained, or as the Maestro himself - former Fed Chairman, Alan Greenspan - so aptly put it, the markets seem to be suffering from irrational exuberance.
This needs to be pointed out in the current context of manipulation and high-stakes politics between the Nah! Brexit vote and the very real threat that Donald Trump might somehow wrangle himself into the Oval Office come November... to the absolute terror of the elite status quo, including everyone from Warren Buffet to Mark Cuban to Janet Yellen and just about every member of congress and Wall Street hedge fund slickster.
Money Daily has recently been pointing out that the any positive developments by Mr. Trump are and have been met with scurrying, rat-like selling of shares on the equity markets by those with very thin, lizard-like skins, probably your average congressional insider and self-important hedge fund managers.
On the other side of the coin, there's the relentless marauding of the Fed, the central bank which is prohibited from buying or selling of equities (unlike the Bank of Japan, which is now a top 10 holder of 90% of the stocks listed on the NIKKEI 225), but which has ample resources by which to funnel money into stocks via proxies such as Goldman Sachs, JP Morgan Chase, and Merrill Lynch, the investment arm of Bank of America, or even the Bank of Japan, which, having run out of luck in the Nikkei, is probably more than willing to buy US stocks.
It's a safe bet that the Fed and their cronies halted and reversed the post-Brexit decline, sending the Dow and S&P 500 to all-time highs via options trading and positions on the VIX, the volatility index, widely parlayed by those in the hedging business.
In fact, days before the Brexit vote, heads of the Swiss, Canadian, US and Japanese central banks were already in collusion to overcome any nasty "turbulence" in the markets, as openly reported by none other than Bloomberg.
So, it shouldn't come as any stretch of the imagination that the same types who distort presidential polls and have the mainstream media wrapped around their little fingers should also keep stocks artificially high as long as it appears that Hillary Clinton will be elected president come November 8.
Once stocks got to extreme levels, a bell went off in the heads of the big traders, telling them to take profits, resulting in a seven-day sell-off (otherwise known as consolidation), culminating in Tuesday's near-100-point decline on the Dow.
Wednesday, the Dow just barely hung on for a small gain, as did the other indices, however, the recent highs achieved by the Dow can be seen as absolute phonies, when referenced to the Dow Jones Transportation Average (DJTA), which sold-off and rebounded like other indexes post-Brexit, but did not attain new all-time highs (for the record, neither did the NASDAQ, nor the NYSE Composite, the broadest index of US stocks).
The Transports had a good run of it, topping out at 8048.09, but were 100 points shy of the all-time record, set back in April, 2015, at 8149.00.
The same is true on the NYSE Composite (NYA), which topped out recently at 10815.43, a far cry from May 2015, when the index stood proudly at 11254.87.
Taking away from this divergence in major markets is the idea that central banks and their friends can only influence so much. They often (make that, ALWAYS) leave bits and pieces of evidence of foul play scattered about. 100 or so points on the Transportation Average and over 400 points on the Composite shows just how sloppy and misguided their adventures into manipulation of not just stocks, but perceptions, have become.
Everybody watches the Dow and S&P. The transports and composite indices, not so much, or so they believe.
Dow Jones Industrial Average
18,355.00, +41.23 (0.23%)
5,159.74, +22.00 (0.43%)
2,163.79, +6.76 (0.31%)
10,695.14, +34.01 (0.32%)