US stock market indexes have broken all time highs (ATHs) several times in last weeks. There is no correction on the horizon and everyday seems to go only upward direction.
Any bad news is just ignored by the Investors. This bull run is not euphoria similar to the other ATHs which always correct severely. It is pretty sure that bull market is triggered by FED's rate cut and quantitative easing some may argue that is driven by the political pressure.
Interestingly, though stock market is at all time high and also, unemployment rate is one of the lowest, economy is not chugging along. In fact, slowing down in GDP growth is very clear so does the earning deceleration of corporate America.
Unfortunately, agriculture is hit hard among all the stock market rally. Farmers are filing bankruptcy at the record rate.
Some argue that earnings have satisfied this bull market. However, earning is a mixed bag MSFT, AAPL, INTC, TSLA have beaten analyst's estimates but NFLX, AMZN, GOOGL, CSCO have missed it too. So, it is not convincing fact.
Another argument is that all the indexes are moving sideways for last 18 months therefore, a positive correction is taking place.
Now, the question is how long this bull market can go on since FED may not pursue another rate cut. Another interesting thing is that volume is pretty low. Stocks are mostly bought by companies themselves and banks. Retail traders and big number of investors are sitting sidelines too in fear.
Most likely case is that this bull run can continue another few months to set more records. But eventually everything that goes up ultimately comes down. A big correction will come because there is no more rate cut or companies can't beat their earning estimates. They are already stretched.. Also, due to low liquidity correction will be felt more severely.
It also means that return in 2020 and onward from stocks will be very limited.
Will the profit from the next sell off comes to crypto market. It could be. Since cryptocurrencies these days work as hedge for stocks. Moreover, the mega event of BTC's halving is on the horizon. If all the stars align at the same time, investors who take out some profit will put in BTC. Some will come to altcoins too. Indirectly, cryptomarket is just lagging from the FED's rate cut and QEs.
But crypto's time will come when party for the stock market will be finally over after some time!
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.
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.
@dtrade
Cryptominer , occasional trader and tech blogger since 2013