[Post Summary]And there is nothing new under the sun.
—Ecclesiastes
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Appearing on CNBC's Fast Money, trader John Kosar, of Asbury Park Research makes a compelling case highlighting buying that has entered the market at present levels over years past. Granted, the technical idea of there being some mysterious "support" putting a floor under the stock market might seem an arbitrary reason to put any faith in past performance. Yet considering sentiment measures presently registering readings rivaling those at market turning points over recent decades, there is more than enough reason not to panic over the stock market's seeming failure to find its legs.
There's no doubt, longer-term, stock selling could become even more pronounced than has been the case over the past six months. However, this is not to suggest the world is sure to end. True, the world as we have known it is transforming. The days of wildcat finance are over. This, more than anything else presently, has become more widely appreciated to the great detriment of the stock market. However, whether the further demise of structured finance is all too likely does not matter one wit. Truth is structured finance will not anytime soon play a supportive role in asset markets (like the stock market). Wall Street's easy money machine can no longer be inflated. This matter of fact has become increasingly obvious. Case closed.
Yet the archetecture of contemporary Wall Street finance built over recent decades is by no means supreme. Indeed, its exposure as emperor wearing no clothes has long been an obvious eventuality to anyone who has read Extraordinary Popular Delusions and the Madness of Crowds, let alone those well-versed in principles of physical economy. So, the reorganization of our hopelessly bankrupt, securities-based financial system is, in fact, a good thing. How soon this will prove long-term beneficial to stock investors remains an open question.
Right now, there certainly is ample voracity remaining in old, dying financial operators to effect a strong turn higher in the stock market. There's nearly $4 trillion sitting in money market funds saying so. Inasmuch as technical and fundamental circumstances need be aligned for there to be a strong stock rally, one might struggle to conjure more favorable conditions.
In the grand scheme of things, however, a finance-dominated world is ending. Just how quickly physical economy adds productive efficiencies necessary for creating wealth out of thin air will determine the stock market's longer-term fate.
—Tom Chechatka
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