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Which Way Wednesday – Dow 34,000 Edition (again)

Here we are again .   After testing 33,900 last night, the Dow is back to 34,100 pre-market and we did spend April building a base at 34,000 so it should, at least, be bouncy.  If we look at this as being rejected at 35,000, it's a 1,000-point run so the weak bounce takes us to 34,200 and the strong bounce would be 34,400 – nothing less than that is going to impress us today and I don't think we'll even get to the weak bounce as sentiment seems to be shifting a little.   Like Bitcoin or Dogecoin, it doesn't take much of a dip for the bullish investors to start to wonder if maybe they overpaid for their positions after stupidly chasing the price up 35% from the November lows.  Were the people who valued stocks in November all crazy?  Did none of them understand how awesome the earnings potential of these companies are?   Well, we're in the middle of earnings season now and it's not that stocks are not hitting their estimates – it's more like they are disappointing the bulls who have bought into fantasies that are impossible to realize.  We are re-opening this year but it's already mid-May and things are certainly not "normal" by any stretch of the imagination so why would the market be worth 30% more than the 2019 average of 26,500 on the Dow?   Did the economy grow 30%?  No, it did not.  Then where would these magic beans have come from that made this valuation beanstalk grow up to the clouds?  We all know the answer – it's stimulus.  There are not 30% more people in the World spending 30% more money with 30% more jobs – the opposite is closer to the truth after losing 3.3M people – roughly the population of Los Angeles.  Another 160M people in the World have been infected and the jury is still out on the long-term effects of covid and the long-term drain on our our heath system for people with chronic conditions.   Out of 160M cases in the World, 64M of them are actively infected.  The World has never had more active cases at one time.  817,345 people caught covid Saturday and we are partying like …

Here we are again.  

After testing 33,900 last night, the Dow is back to 34,100 pre-market and we did spend April building a base at 34,000 so it should, at least, be bouncy.  If we look at this as being rejected at 35,000, it's a 1,000-point run so the weak bounce takes us to 34,200 and the strong bounce would be 34,400 – nothing less than that is going to impress us today and I don't think we'll even get to the weak bounce as sentiment seems to be shifting a little. 

Like Bitcoin or Dogecoin, it doesn't take much of a dip for the bullish investors to start to wonder if maybe they overpaid for their positions after stupidly chasing the price up 35% from the November lows.  Were the people who valued stocks in November all crazy?  Did none of them understand how awesome the earnings potential of these companies are?  

Well, we're in the middle of earnings season now and it's not that stocks are not hitting their estimates – it's more like they are disappointing the bulls who have bought into fantasies that are impossible to realize.  We are re-opening this year but it's already mid-May and things are certainly not "normal" by any stretch of the imagination so why would the market be worth 30% more than the 2019 average of 26,500 on the Dow?  

Did the economy grow 30%?  No, it did not.  Then where would these magic beans have come from that made this valuation beanstalk grow up to the clouds?  We all know the answer – it's stimulus.  There are not 30% more people in the World spending 30% more money with 30% more jobs – the opposite is closer to the truth after losing 3.3M people – roughly the population of Los Angeles.  Another 160M people in the World have been infected and the jury is still out on the long-term effects of covid and the long-term drain on our our heath system for people with chronic conditions.  

Out of 160M cases in the World, 64M of them are actively infected.  The World has never had more active cases at one time.  817,345 people caught covid Saturday and we are partying like
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