NYHL NYSE New Highs-New Lows Weekly Chart

The NYHL keeps printing lots of new highs on the fiscal (Congress) and monetary (Fed) stimulus promises and vaccine hype. The Fed is on tap this week with a presser on Wednesday afternoon. Pope Powell is going to try to sneak through this week unnoticed but it will likely not play out that way.

Stocks are typically bullish (80% of the time) the day or two in front of a Fed meeting so the professional traders are frontrunning this expected bullish bent. S&P futures are up +13. VIX 22.43. The blue fractal may repeat. We will not have to wait long to find out. The NYHL has remained elevated a very long time; the behavior is atypical. It occurred late 2019 into early 2020 and whoosh. That drop was more technical in nature although coronavirus (COVID-19) was blamed. The pandemic was definitely a catalyst but regardless of the virus, that same type of drop and outcome was expected. Of course the Fed and Congress stepped in with record-setting stimulus to pump stocks to new record highs again rewarding the wealthy elite class.

A year goes by, people are sick and die, the country asks why, blame it on the last guy, look up, do you see the darkness in the sky? The orange circle is the peak where new highs were off the charts that week and only the weakest of the weak stocks made new lows. In the prior fractal, the big red whoosh downwards in the stock market occurred 6 weeks after the top. That 5th week things were dicey as well. Also note the spike high just inside the orange box. Stocks slumped over that next week and then the bottom fell out the week after.

We're there folks. Is it this week when hesitation enters markets and then next week the wheels fall off or maybe stocks become soggy the week of 2/8/21 and then fall apart. Get out of your longs unless it is a position you want to hold for a long-time like 5 years, 10 years and longer, and realize that the position will likely lose 50% of its value (your capital) over the next year or two before things recover again in future years.

Obviously, everyone expects stimulus money to carry the stock market through the year but the stock market is already porked-up making a glutton of itself for 12 years at the Fed's easy money feed trough. The world is awash in liquidity. If you try to force one more bite of easy money candy, or cake, or pie or jelly doughnut into that mouth, it is going to puke its guts  out. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.