Note this chart from Zero Hedge that illustrates how macro data has fallen off a cliff in the past 60 days while the markets have continued to climb. There are other charts to reinforce the point but do you really need more charts than this very obvious one.
Let's not kid ourselves – this is no surprise, we can see it, we can feel it – but we've been riding that market wave up and up as if it's never going to break.
I told our Members I was going to do a lot of reading over the weekend to see if S&P 1,600 was justified and we just reviewed a ton of articles in our Member Chat, since 3:19 this morning, in fact, and the short story is – it's not justified. The market is ONLY up due to unrelenting QE and we all know that the same amount of QE over time has a diminishing effect on the markets and, by our value metrics, the S&P is at 1,450 naturally, plus $150Bn a month pumped in by the Fed and the BOJ to give us 150 bonus points. Rumors of the ECB putting in stimulus as well put us over the 1,600 line but I think rumors are not enough to sustain us and, until we get an actual announcement, it's not likely to hold up.
Those are the kind of nice, quick gains we like to take off the table (our "Egg McMuffin Money") ahead of normal trading and we've already flipped to the Dow (/YM in Futures contracts) at the 14,900 line – looking for a break below as the Dollar gains strength while the Euro dips below $1.31 and the Pound fails to hold $1.555 (the logic behind all this is exactly what we talk about all weekend in preparation for these trades, so I…
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