March 25, 2012
Weekly Market Outlook
By Keith Schneider
This week the organizers of an Olympic shooting competition being held in Kuwait, inadvertently played the parody of the national anthem of Kazakhstan from the movie "Borat" instead of the real one, setting off outrage and a full blown Investigation. This led me to think about the markets and whether the current bullish tune being played out is just a parody, or the real thing? The underpinnings of this rally are artificially low rates, a tapped out US consumer still de-leveraging, the euro zone debt crises, and an anemic but steady US economic recovery still feeding on low rates.
Elliot Wave theorists bearish for quite some time, continue to call for a stock market meltdown. Sentiment indicators are at irrational exuberance levels but the equity markets hardly budged, down just about 1% for the week and staging a nice late day comeback on Friday. Price action remains bullish for equities but the improved global macro price action is in the process of being tested with strong rallies in bonds and gold. Let's go to the charts to see what levels need to hold for the bullish macro picture to remain intact.
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