The low-volume rally comes to an end – now what?
As you can see from this chart of On-Balance Volume, there's been a HELL of a divergence between it and the S&P and, in the end, OBV usually wins out. OBV is a momentum indicator that uses volume flows to predict price and it's generally very accurate – except when certain key stocks are being propped up in order to create the illusion that there is index strength when, in fact, the people manipulating the market are dumping everything else they hold into the greedy hands of the retail suckers. Then it looks like this.
Maybe this time is different, right? Like last fall, when OBV tanked in November and the market didn't collapse in November or December – it collapsed in January, falling from 2,100 to 1,800. That's only 14% and we're up 7% since Trump was elected so a net loss of just 7% from where you were before the election is no reason not to BUYBUYBUY expensive stocks now, is it? At least that's what the stock pushers are telling us on TV and they are on TV – so they couldn't be lying to us, could they?
Remember the great bull markets of the 50s and 60s or the late 90s? What did they have in common? Rising wages! Rising wages are the foundation for sustained economic growth and we're simply not there yet and you KNOW what happens when wages stagnate and prices rise, don't you? Assuming you are not having this article read to you, you were on the planet 8 short years ago when we last suffered the consequences of things rising to the point at which people could no longer afford them.
And by people, of course, I don't mean you – you are in the investor class and you have something 80% of the people in this country do not have, which is MONEY! You have money in your checking account and money in your savings account – in fact, you have SO MUCH MONEY that you are able to plan for your future – very much unlike 240M of your fellow countrymen.