Stocks Are on the Fence Waiting for Inflation and / or Earnings

This technical analysis video of the Dow Jones Industrial Average suggests that the stock market doesn’t know exactly what it wants to do, and is poised to make a substantive move in one direction or the other. How’s that for a commitment? Welcome to the wonderful world of charts, graphs, and moving averages! As always, I am not so ambivalent; I do believe the Dow could trade lower in the short-term — it has certainly gotten ahead of itself. I’m especially worried about the long-term primary driver of value — earnings (or, more accurately, free cash flow). But here’s the rub: I actually believe stocks will go higher — and probably much higher. How is that possible? If I’m worried about earnings, and I believe earnings are the primary driver of long-term value, then why would the stock market go higher? The answer is simple: inflation. The global policy of zero interest rate policy (ZIRP) is conspiring to ensure that pri...