This Market Is About To Plunge (Day 1)
There's a lot of senseless optimism here at CAPS now. Far from the usual uber-bearishness that we have from alstry & company, we now have relentless bullishness. #7 on CAPS Porter, and top 20 member Tigerpack have successfully riden the bear market rally to new highs in their CAPS scores. People like Tigerpack are now claiming we're going to get a 500 point up move in the dow in the next week. Is he full of it? Simply, yes. This rally, like all the others of the past two years, will soon end. First and foremost, interest rates are exploding higher. Check out the TNX or TYX charts to see this in graphic detail. The TNX (10-year govt. bond) is now over 3.00% after falling to 2.03%. The 30-year bond interest rate has increased just as rapidly. This means that mortgage rates are quickly rising meaning that what little unfreezing in the credit markets is about to be undone. No credit>falling consumer ability to purchase>falling earnings.
This is part 1 of a series of undetermined length. There will be a post every day highlighting a different economic reason that explains why you are about to get crushed if you are still buying stocks into this terminal rally. Once the rally ends and the bear market resumes, these posts will cease. Hopefully this series will be short as I own puts, but I don't mind carrying on for a few weeks if required.