Big Picture… What Has Changed in the Last Week?
Big Picture… What Has Changed in the Last Week? by Graham Summers – Gains, Pains and Capital
This is getting old.
The PPT is now juicing Oil higher, because doing so relieves stress in the junk bond market (a large percentage of junk bond issuers are shale companies that require higher Oil prices to be profitable).
This, in turn, is sending a “all clear” signal to stocks, inducing algos to buy indiscriminately.
Put simply, the formula for this market rig is:
Buy Oil futures, because it will drive Junk Bonds higher, and stocks will follow.
You can see the rig right here in plain sight… Oil (black line) pulling Junk Bonds higher (blue line) almost tick for tick.
Critical market internals suggest this rig is now coming to an end. Two major market leaders (Goldman Sachs and the Semiconductor index) have not only been lagging on this latest bounce, but both were DOWN yesterday despite stocks rising 1%.
Sure, stocks might bounce a little higher, but at the end of the day, it is clear that corporate profits have peaked, the economy is rolling over, and the Fed is tightening.
Which of these is likely to be better six months from now? What exactly makes stocks an attractive investment right now?
In chart form… what has changed about this?
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