May 31, 2018 | Misinterpreting the Markets

Elsewhere on the page, I’ve detailed the case for a nearly 300-point rally in the S&P 500. This goes squarely against my gut feeling that the U.S. economy will be in recession before the year ends. The chart I’ve presented starkly refutes this. It says the economy is more likely to stumble along, producing stock-market rallies that will seem illogical at best, reckless at worst. However, given the inexorable flow of money into U.S. stocks, especially from places where economic prospects seem even dimmer, it is hardly farfetched to predict that rallies that shouldn’t happen…will happen. They will continue to plague ‘logical’ folk as long as a fund manager still breathes. Along the way, said money manager will have staunch help from short-covering bears, few of whom will ever understand their key role in misinterpreting the psychology of markets.
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Rick Ackerman May 31st, 2018
Posted In: Rick's Picks