US markets are on fire. Such power punch by bulls is rarely seen. One wonders what has changed so dramatically that bulls are charged to such an extent. If the answer is Fed's promise of only two rate hikes in 2016 as against earlier threat of four rate hikes, I am not buying that argument. If you are told Fed rates have been kept on hold and hence the belligerence of the bulls, do not believe it.
Look at the complete picture of bull run. It started in mid Feb 2016. Fed decision, to keep rates unchanged and the hint of only two rate hikes in 2016, came only day before. Then what explains the start of bull run in mid Feb 2016. Do not tell me that bulls knew of Fed's mind as early as Feb 2016!!
What has changed so dramatically in global economy that the bulls are cheering so ferociously? Is it oil and its northward journey? But oil has gained only $10 a barrel since Feb 2016, which amounts to no big deal considering the fact that it is still in bear territory and looks poised to sink into well again. There is no sign of production cut on the supply side.While on the demand side there is no pick up since the global economy is in the clutches of recession. The short point is that oil's small gain is not sustainable and is no indication of global economic well being.
Then what is driving the bulls crazy since Feb 2016? If we look at Dollar Index we find that it is sliding with consistency since Feb 2016. This could be driving the bulls to fearlessly trade in US markets. But the moot question is - what is driving dollar down against major currencies? Some maintain that this is due to a secret deal struck by central bankers at G-20 meet in Shanghai on 26/27 Feb 2016. Deal was to weaken the dollar so that there is some stability in global markets and trade. Very noble!
However the question that begs an answer is simply this - how on earth did the bulls come to know of the secret deal of Central Bankers of G-20 nations earlier than it was hatched? Is it pointing to chink in the revolving door policy of US financial system? Point to ponder seriously!!
Meanwhile Dow Jones has closed above 17600 in today's trade and this close is very near day's high. This has been another strong showing by bulls. Looking at the situation, target of 18200 in Dow in this current bull run does seem quite attainable.
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