The Nasdaq future (100) moved up enough to trigger a buy signal at 3463 and raced through the first objective. Quickly, the market reversed back through the Sell point at 3447 and is melting into the downside objective of 3394.
The price action is ringing in calls for a major market and economic contraction. The present reality is the market has returned to Feb. levels in a hard seasonal round trip. Traders continue to embrace the notion that the Naz Leadership is a harbinger of bad things to come. We are unconvinced.
A major theme of our understanding of QE is the higher elasticity of capital market prices to economic activity. A world focused on high speed trading has increased the link between markets and activity. Economic lags continue to be well behind the 400 millisecond capital investment. The other "analysis" we hear is the rising 10 year note price must mean something bad is coming. This myth was heavily hyped in the sub-2 % spike. Contrary to the "This must be bad" thinking, the economy bottomed and improved from that point.
As we mentioned in a note last month: Equity market gyrations are over analyzed both up and down. Behind the apoplexy, a 2+ economic advance struggles for traction and something faster. Certainly, tanks and shirtless egomaniacs complicate confidence but deep down Americans focused on missing planes and celebrity club hopping have little room for the Ukraine. We continue to believe markets have been "loose" from the underlying reality for some time. There's less going on regardless of direction.