Major averages bounced hard yesterday on higher volume after the Monday mini-crash. Don't let all the headlines make you think today's market's gains are anything special. Yes, they are the largest gains in 4 years, but as all our members know, context is key. And after the mini-crash we have witnessed, a bounce of 4%+ is nothing special. That said, with all the money printing going on, markets may decide to catch up to former levels, in which case, a number of up weeks may be in store where the markets make baby-steps back toward old highs.
That said, deeper trouble may be brewing. Some analysts including Ray Dalio who is the CEO of Bridgewater think that the Fed is lining up for another round of QE, or QE4. With central banks in full throttle money printing mode, and with the global economy nearing recession, central banks have less and less room to manipulate markets higher, thus should the Fed eventually paint itself into a corner, a loss of confidence in the Fed could spark a far more serious correction down the road. But making predictions of if and when such a crash would occur is futile.
As always, with all the market crash talk that has been asked of us these days, we examine markets in real-time, day to day, so that gives us enough to know what to do on the long and/or short side. Keep in mind that no one has ever demonstrated with any consistent reliability the ability to predict the timing or depth of market crashes. The future doesnt exist. At www.virtueofselfishinvesting.com, all we need to know is the now.
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