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Inflation Watch: A TSUNAMI of Liquidity Is Flowing Into the Financial System
The next leg up is starting now.
Stocks finally broke above resistance (red line) in mid-May 2020. Last week they backtested that breakout and held. This means former resistance is now support.
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The market is now forming a triangle formation (blue lines). By the look of things, we’ll get a breakout this morning to the upside. Which means… the next leg up is hitting now.
The upside target is to close the gap left by the initial limit down move in early March (green rectangle in the chart above).
The fact is that the market continues to rally in the face of terrible news. The COVID-19 pandemic appears to be starting a second wave. And the US economy has yet to even rebound from the structural damage caused by the first wave of COVID-19!
So why are stocks rallying?
Because of the TSUNAMI of liquidity policymakers are throwing at the financial system. Central Banks have printed over $5 trillion in the last three months. On top of this, G10- governments have implement fiscal stimulus programs ranging from 5% (Norway) to over 35% of (Germany and Italy) of their historic revenue and spending budgets!
Put another way, trillions upon trillions of dollar/s yen/ euros/ pounds have been printed and funneled into the financial system. This money has to go somewhere. And right now it appears as if a significant portion of flowing into the markets.
The positive aspect of this is that it is pushing stocks to new highs in some markets. The negative aspect is that this is going to unleash inflation.
It is not coincidence that gold is exploding higher in clear uptrends against every major currency in the world (the dollar, the euro, and the yen.)
The biggest opportunity in the markets today will be in INFLATION PLAYS. Smart investors are already taking steps to profit from this.
On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The report is titled Survive the Inflationary Storm.
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Today is this last day this report will be available to the public.
To pick up yours, swing by:
https://www.phoenixcapitalmarketing.com/inflationstorm.html
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research
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