Raw Price to Monthly Volume:
And the capital outflows….
Now I heard Rick Santelli yesterday discuss whether the market can continue its run to new all time highs. And with the obvious caveat of completely accepting that the fundamentals no longer have any correlation or relevance whatsoever to the market then yes, Santelli believes the market can reach all new highs. On what, one may reasonably ask? Well “kinetic energy”, he says, otherwise known as ‘Animal Spirits’ on Wall Street.
But it’s not so much kinetic energy that is levitating this market devoid of any supportive fundamentals, it is the fact that volumes are thin enough and technology has progressed enough that it has become entirely viable for existing policy champions (NY Fed/Citadel algos) to halt even drastic downward momentum runs and then for corporate treasury departments to grind the markets higher through record buybacks. What we have left is a market of price insensitive participants i.e. corporate treasury departments and the Fed’s cronies (who incidentally make a fortune enacting the manipulation on behalf of the Fed).
Now I know that the last few remaining true believers, because I’ve talked to several, will suggest this explanation is just fancy talk. But I ask you to look at the above charts and explain to me how else a market runs higher for 7 years in the face of the capital and volume exodus that has taken place?
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