Friday, 7 November 2014
American markets to cool down after election euphoria
Click to enlarge image.
The pale blue triangle with which I previously depicted what I thought would be the top of the Parabola has been overpainted by the amber band which depicts the range of the present coninuing super up-trend.
The green band depicts the "normal" range of the Dow Industrials, based on long-term trend lines. The present trend has grossly overshot this range and is in for a fall sooner or later.
The amazing recovery from the recent bottom was sparked first by the FED asserting there would be no end of ZIRP in the foreseeable future, second by results showing that the American economy was entering a phase of self-sustaining growth, and, more recently, by election euphoria where electors appear to have temporarily believed that economic woes can be solved by giving the President a kick in the ass.
ZIRP (artificially imposed zero interest rates) will end when it is clear that the economic recovery in America is self-sustaining.
The election is over; the euphoria is abating and reality will now set in. Another dip is imminent. Could this one be the big dip?