Mega Bull?

Thur Mar 24

Bank of America is calling for a major bull move… from current levels. What accounts for such heresy? Check out the following chart.

For you Elliot Wave folks, it sure looks like a wave 5 at this point. I’m no expert but I believe wave 3 is usually the largest move. However, on occasion wave 5 can turn into a blow-off tsunami. This latter possibility would certainly coincide with a worldwide panic central bank QE. Something to noodle on.

As the world crumbles and enters a dangerous WWIII scenario, that could also support the mega move thesis. It will certainly spark a massive flight to quality which will benefit US stocks. This could be exacerbated by the stench of US bonds (which would normally be the flight to quality target).

Why the bond stench? The current bond market is at the edge of long-term support. What could instigate a selling wave? How about a loss in faith worldwide for the dollar as the reserve currency. Why the loss of faith? For the first time in history, the US has weaponized the dollar with the SWIFT sanctions against Russia. Whether or not you support this move is irrelevant. It raises questions for our country’s allies and enemies alike. Countries like China hold massive amounts of dollars and Treasuries. World chatter to decouple from the dollar has already been occurring. This only adds fuel to the fire. If the dollar loses reserve status, prepare for skyrocketing rates and a massive shock to the US economy. How much that would offset stocks is debatable. The one certainty of this brave new era seems to be volatility. Fortunately, that can be traded as well. More on that another time.

Good trading!

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