Stocks tried to rally today, but just managed a little bounce.
If you take a look it is clear that stocks are ‘coiling’ within fairly tight symmetrical triangles ahead of next week’s FOMC meeting.
Fundamentally the economy is weak, and financial assets are overpriced.
They could get more overpriced here for the short term, but the risks still seem elevated.
The primary weakness in the economy is the lack of wage growth providing the disposable income that consumers need to repair their domestic balance sheets and to do the kind of broad and steady buying that will be a stimulus to GDP and aggregate demand.
The difficulty is that the one percent is keeping a huge portion of the domestic public down financially, the better to shift their wealth through political policy, tax loopholes, and wage suppression.
It is not a good longer term situation but the ruling classes and their courtiers are traveling in rarefied realms of their own construction.
Have a pleasant evening.
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