Monday, January 4, 2021

SPX Update: 2021 Arrives

As those of you who own calendars are no doubt already aware, 2020 is officially over.  Will things improve in 2021 -- and does it even matter to the market whether they do or not?  Our overlords seem intent on doing everything they can to create inflation, with everyone tripping over each other to see who can come up with the largest "stimulus" packages (and recall that inflation can be bullish for assets, including equities).  This is likely the fifth wave of a dying empire, so I'm sure our vaunted leaders will take us out with a bang -- while our criminally-undereducated masses cheer them on the entire way.  The handful of us who object will be branded as heretics and "deniers," especially since things will probably seem to be working... for a time, anyway.

Point is, money printing and debt and inflation, and all the things that ultimately lead to collapse, are actually insanely bullish for a while.  The problem is not that they don't work for a time, it's that they're not sustainable for the long haul.  Nor can they be easily recovered from.  Life is a constant negotiation of the present against the future (we must always consider how what we do today will impact us tomorrow), but increasingly, our politicians and the populace only care about what happens in the next five minutes, and "tomorrow" is rationalized away with magical thinking.

Anyway... a discussion for another time, perhaps.

At this point, SPX is again threatening the intermediate trend line. 

Near-term, the blue trend line seems to be the relative proxy for the IT trend line:

In conclusion, bears have one last shot here, at an ending diagonal, which would head-fake over blue (chart above) then whipsaw -- but if SPX can break out and sustain that break, then bears might want to stand aside for a while.  We'll see how it goes.  Trade safe.

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