With quantitative easing, low interest rate, hype over US-China trade deal and FED's assurance of no rate hike, stock market went to rampant bull run. NASDAQ composite Index (^IXC) broke record for 11 days with positive gain without any slight correction. Even with slow down of GDP and mixed earning reports of Americas corporations, bulls are ignoring any bad news. It feels like that for the stock market any bad news is a good news.
It needs a radical bad news to halt the bull overrun. Investors and traders finally got one when US killed a top Iranian general on Iraq's soil. The incident can escalate to full scale war between Iran and US. Finally, a bad news is a bad news for stock market.
Gold settled in four month's high which is a precursor of a correction.
The year 2019 is a record year for stocks. NASDAQ100 gained 39% and SPX500 gained 31%. Investors were blindsided by the euphoria. The Institute for Supply Management's manufacturing index fell to its lowest level since June of 2009 according to Yahoo news. Few months back, Yield Curve inverted which is almost a sure sign of upcoming recession. When stocks goes parabolic and unemployment hits 50 years low, the next thing is that it can't get any higher. Slow down or deterioration of all indicators is the next move.
However, this Juggernaut bull may have some momentum left. It may continue for couple of more months. But during Q1 earning and GDP reports, market may go bananas. Moreover, when democratic president nominee will be finalized, national polls will be a concerned for investors. Democratic nominee will always lead the presidential polls whoever win the election. Market will just panic on the outcome of a democratic president since he or she may roll back massive policy bonanza for corporations.
With this upcoming correction in stock market, will some money come to crypto market? It may since some young investors will put their profit to cryptos. Moreover, in May the mother of all bull indicator for cryptos will incur: the BTC's reward halving. Therefore, some money may move into Bitcoin first then to some altcoins.
With Gold's positive move, BTC and altcoins can also see light at the end of tunnel.
Finally, market has hit by the speed breaker. Depending on the severity of Iran's retaliation, Market can lose the momentum. Finally, in a election year when stock friendly President will be up for re-election and may fall behind in polls, Market may go bananas. However, do we short the market now? I would wait until March or April for Market to lose all its juice before the mega correction. March-April could be a great time for bears and shots.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions. This opinion is only for educational purpose.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
Cryptominer , occasional trader and tech blogger since 2013
