Tonight, I will be presenting my “Big Picture Update” for the ES. Before I get into the technical picture which includes the EW count and Fib levels – I would like to put into place the bigger picture which includes looking at interest rates, inflation, economic impact from the geopolitical situations around the globe and of course what is taking place in the US.
I received a comment/question from a subscriber that started by stating “It’s very hard to understand how a $45+ trillion exodus from equities markets is supposed to happen.”
My response and my technical update: I’m not sure how you arrived at the $45 trillion + that would be leaving the markets. But can you do the same “math” to figure how much left the market in 3 short weeks back in March of 2020? And then how much was put back into the market via QE x infinity over the next 2 years. Also, here is the more difficult part – to attempt to estimate how much of the gains over the last 2 years were due to over evaluations and hopes for a continued extreme pace for the run to grab the “gold ring.” Irrational exuberance for sure takes partial if not most of the blame. Also, consider what happened back in 2000 to 2003 on the buildup to the Dot.com bust and then the actually collapse of the NASDAQ 100 – at that time the NQ lost 82% of its value when it dropped from 4884 high in March or 2000 to the 809 low in October of 2002. Please note that it is from that low, (809) that NQ started its historic journey to the stratosphere. Add to this that if Elliott Wave analysts don’t have a crystal ball to tell any of the “what, who, when, where, or how’s” of a move neither can the FED Chair. My opinion on the FED is that they have been using flawed models for years to attempt to predict economic conditions. So, I don’t see how Powell or the FED as a group can model the future when there is so much uncertainty and the “status quo” has been shattered and destroyed primarily by the global pandemic. So, all that is taking place here in the US is not our problem alone — it is a global problem that continues to get aggravated by the geopolitical disruptions occurring around the world. Lest of which is global warming — once again we as human beings tend to be very short sited, (including our own SCOTUS) thinking that everything will just be “alright or fine”. Once you have a view of those numbers and thoughts it might become clearer how the $45 trillion might evaporate. I also feel it is important to realize that most people didn’t see the Crash of ’29 or the ensuing global depression coming and yet it did and devastated the global economies – as well as people didn’t see the seriousness of the COVID pandemic and many still don’t – but nonetheless it happened, and it basically shut down the world for 2 years. How we recover is to first recognize and adjust to the inability to return to “normal” as it was prior to COVIDs arrival. The recovery from the damage created by COVID has begun but no means is anywhere near producing a widespread recovery.