US Stock Market Enters Parabolic Price Move – Be Prepared, Part II

In the first part of this research article, we briefly discussed the recent price and global economic events related to the 2018 to 2020 US stock market volatility and the COVID-19 virus event.  The premise of this research post was to highlight the current upside parabolic price trend that initiated shortly after the 2015~16 US election cycle event.  It is almost impossible to look at the NAS100 chart, below, and not see the dramatic upside price advance that took place after the November 2016 US elections.

It is almost as if the US stock markets had been primed by Federal Reserve intervention over the previous 5+ years and someone let the monster out of the cage.  The deregulation, changes to tax structures and general perception of market opportunity changed almost immediately after the November 2016 elections and really never looked back.

BUBBLE PSYCHOLOGY & PROCESS

A close friend of mine suggested the current tax structures provide a very clear advantage for corporations which allows them to retain a minimum of 14% more revenue annually.  This is a huge advantage for any profitable US corporation when one considers all aspects of tax laws. Additionally, President Trump changed the system from a “global” to a “territorial” structure. (Source:https://en.wikipedia.org) This provided additional tax reductions for multi-national corporations and prompted US companies to stay within the US.  These new tax laws had a major impact on the bottom line after-tax revenues for thousands of US companies over the past 3+ years.

Yet, one has to earn a profit to be able to take advantage of these tax law changes and the COVID-19 virus event has put a serious dent in the earning capabilities of thousands of the US and foreign companies.  The Redbook YoY data, representing Retail and Consumer Merchandise activity, has continued to post negative levels that appear to be far greater than at any time over the past 20+ years.

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