Markets climb technical wall of worry: Bubble or blood moon?

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It is what it is. Yeah, the Rangers are in an 0-2 hole. Lebron had to be helped off the court and now Lebroning is the hottest sensation across the land.  The city of Seattle now has a minimum wage of $15 an hour. What a country! I could be talking about all of these things. Yet the stock market goes ever higher.

There are elements of a bubble in place. It’s hard to say if there is a bubble in place because of Seattle or despite it. It’s impossible to have full blown prosperity in an era where fast food workers stage a world strike. That’s why we can’t party like its 1999. We would need the kids at McDonalds to fire up their laptops and start trading Facebook. On the other hand who in their right mind creates a minimum wage that is more than 2x the national average and a third more than the rest of the most liberal state in the country?

The state next door to the south has decimated lumber jobs yet does not allow an individual to pump his own gas. That’s right, try pumping your own gas in Oregon. I digress but every so often markets will become delusional. Its takes a certain type of psychology to identify a bubble. It doesn’t happen because of fundamentals or any sound reason. A bubble forms because mass crowd psychology somehow went off the rails.

But if you want a technical reason I can give you one as well. For that we have to go back to 2011 and the twin debacles of the debt ceiling/European crisis. You remember it; I’d like to forget it. It was not a happy time for many people. But it was also a time where bears thought the stock market would retest or break the 2009 lows. As we now know, it didn’t even come close.

I told you as much because I also told you I had technical evidence 2009 was a generational low. Without beating that horse into the ground bears developed a complex as a result of that sequence. They haven’t been able to bring a serious correction to full maturity since then. Now they gave up again. Back in April they had the bulls on the ropes. Go look at the charts. The Russell 2000 was leading to the downside and so was a lot of technology. But then that blood moon hit and the bears were toast.

I’m not going to dwell on the blood moon because I really don’t understand why it would impact the charts. All I know is that it does. But what I am going to dwell on is I think bearish behavior and lack of conviction is a big part of the delusion and madness going on in the market right now. So what does that mean to us in the natural?

Simply put, another time window bit the dust. The 233-day window in the equity market is toast. However there is still a chance for the 233 window in the EUR-USD. On this chart you’ll see the low materialize on the back end at 237. There is an excellent Gann square of 9 calculation. We already have a reaction in place. But won’t equities go up if the EUR-USD continues to do so?

Yeah, lots of charts suddenly look better. The Russell is in a serious state of repair. So is the HGX housing index. What was leading to the downside no longer is. Now we have negative interest rates in Europe. They did telegraph it so nobody should be surprised. But the market went up anyway in what is just another excuse for bears to cover. Notice I did not say buy. There is some buying going on but I also think we are seeing bears give up en masse.

There is now enough here to keep these markets elevated until we get to the June summer seasonal change point otherwise known as the summer solstice.

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