Will we ever find a healthy medium of pessimism/optimism?

3 mars 2020

This Fed rate cut was premature and poorly timed. This will be looked back onto as an utter waste of ammunition. A rate cut is not engineered to alleviate a biological problem. This is a problem that needs to be worked out by the market by itself. The question is whether yesterday's 5% market gain was due to the "expected rate cut" being priced in ahead of time OR if it was an almost algorithmic/routine buyback in response to how drastically oversold the market was relative to its near term. Furthermore, if you look at this action from a different angle. The Fed's smart enough to know that a rate cut would only prop up the market temporarily. Therefore, what can be deducted is that they're starting to see structural weakness in the overall economy. And the coronavirus strongarmed the Fed into acting sooner than intended. And the bigger picture concern is this...We have now entered a state in which people are searching for particular patterns everywhere, and they're almost seamlessly finding these specific signals everywhere. This is a common fallacy that leads to distortion. Just quoting Peter Thiel when he was describing the diversity myth on college campuses, "They looked for racism everywhere, and they began to find racism everywhere". This is the kind of approach that leads to mass misinformation. When you get stuck into this trap of only cherry-picking pieces of information that fit into your already negative picture, you will start to see developments of extreme distortions. Right now we're entering a state in which coronavirus has created a negative and fearful outlook, which has caused people to cherry-pick pessimism and overlook optimism. Be careful, this can lead to a downward spiraling market in which we "talk ourselves into a recession".

4 mars 2020

Note

SPY broke out of tightening wedge. I see a short term reversal, waiting for a confirm of the new trend