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Sunday, June 29, 2025
Friday, June 27, 2025
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Technically speaking, the market wants to make a massive drop. Geopolitically, the market wants to make a massive drop. I say so because of the tariff mess (with continuous uncertainty), lack of signed trade deals/agreements and Middle East tensions. In addition, for the first time since 2022, the GDP for the first quarter was negative (thereby signaling a recession). Also, based on recent revisions for this year and next year, the Fed is forecasting much higher inflation, lower GDP/economic activity and higher unemployment rate (as a result of tariffs). At the moment, the effect of tariffs is yet to be seen in the economic data because many companies in anticipation of new or increased tariffs were front-loading their imports by importing goods ahead of the effective date of the tariffs to avoid the higher costs. But those goods can only last so long before more are needed at higher prices.
The reason I'm saying this is to point out that there isn't a justified reason why the market keeps going up when everything (technicals, fundamentals and uncertainty) is point to weakness not strength.
So why does the market keeps acting irrationally by going up when it should be going down?
The simple answer is Trump. If you have noticed, whenever the market starts dropping, he panics. He is too focused on the market. That is why the name TACO (Trump Always Chickens Out) is very appropriate for him because he cannot do anything avoid that name from sticking (though he really dislikes it) since he will continue to act like that given that he is too focused on the day to day movement of the market. Which also explains why he is always criticizing the Federal Reserve Chairman Jerome Powell about interest rates.
So when the market starts dropping, he reverses his position on issues or says something to manipulate the market up. Because of this, it is hard to short the market even in the face of bad news. Take for example the conflict between Israel and Iran. When it started, it would have caused a major drop in the market, but that didn't happen. Yet when the ceasefire was announced, the market went up on the news. So market participants are afraid of shorting the market. But when the market finally turns to the downside, we are going to see a massive selloff because folks will not be ready for it since they are using Trump as a backstop/insurance for any downside move. But that will fail because, given his impulsivity, the same Trump will unintentionally say or do something that the market just cannot ignore, and that he cannot reverse. But even if that doesn't happen, at some point, the market will be unable to ignore the negative impact of all I just pointed out.
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The reason I'm saying this is to point out that there isn't a justified reason why the market keeps going up when everything (technicals, fundamentals and uncertainty) is point to weakness not strength.
So why does the market keeps acting irrationally by going up when it should be going down?
The simple answer is Trump. If you have noticed, whenever the market starts dropping, he panics. He is too focused on the market. That is why the name TACO (Trump Always Chickens Out) is very appropriate for him because he cannot do anything avoid that name from sticking (though he really dislikes it) since he will continue to act like that given that he is too focused on the day to day movement of the market. Which also explains why he is always criticizing the Federal Reserve Chairman Jerome Powell about interest rates.
So when the market starts dropping, he reverses his position on issues or says something to manipulate the market up. Because of this, it is hard to short the market even in the face of bad news. Take for example the conflict between Israel and Iran. When it started, it would have caused a major drop in the market, but that didn't happen. Yet when the ceasefire was announced, the market went up on the news. So market participants are afraid of shorting the market. But when the market finally turns to the downside, we are going to see a massive selloff because folks will not be ready for it since they are using Trump as a backstop/insurance for any downside move. But that will fail because, given his impulsivity, the same Trump will unintentionally say or do something that the market just cannot ignore, and that he cannot reverse. But even if that doesn't happen, at some point, the market will be unable to ignore the negative impact of all I just pointed out.
SPX-DAILY
SPX-60MIN
SPX-30MIN
SPY-15MIN
Thursday, June 26, 2025
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