SPY corrects

FX:SPX500   S&P 500 Index
420 2 6
100 MA & Fib, 200 MA & Fib, 600 MA and Fib and October lows, all line up perfectly. Looks a lot like 2011 summer. RSI lower highs, loosing Momentum, etc, etc. FED can't raise, forget all the talk, their "talk" just became cheap. BOJ loosing its grip on the Yen. Signs of FED induced, world bank induced joy ride, over. Remove Oil             , and inflation is at 2%, I say again 2%. Eur is going lower, Oil             heads back down after the Yemen news subsides (maybe renewing the small cap bankruptcy cycle - oil             pop won't save them) , and dollar keeps going up or down? Yen also in transition. Markets do NOT like uncertainty,and we are in uncertain times, disappointing earnings season starts with Alcoa             4-8-15. Money flows to T Bills             , but at WHAT rates, if Yellen can't raise. Causes more uncertainty, which markets do NOT like. Big meetings, lunches, right now, government and wall street big shots, discussions on how to NOT create a Bond market fiasco, and bottom line, there are no guarantees, creating even more uncertainty on how to really exit QE and the FED addition (at the same time we have a poor earnings season about to hit, and nothing can stop it unless you figure out how to stop time). Where do we go for yield if market swoons? Junk Bonds, nope, not reliable now even for the couragous. Gold             , nope. Cash? If yes, you will hear a great sucking sounds from stocks. Oh my Gosh, there is no where to get yield? What will money brokers do? Well, we've never been here before, and THEY DO NOT KNOW FOR SURE HOW TO DO THIS. Uncertainty, and soon the street will hear it, know it, react to it. Add a few sprinkles of world unrest, yikes! Yes I am short stocks, period, until further notice or 600 day moving average. And it will come quickly IMO             . Do your own homework, and prove me wrong. I welcome discussions on all this.
I am short since Dec 2 for all the reasons you mention above and more. I was ready for a baby seal clubbing season. But I must admit my commitment to the short is waining. My only real hope for the short term is the corporate buyback blackout till approximately mid/late April. As soon as Apple and the like resume their purchases, the market will drift back up unless there is a distinct market shock to counter the buybacks or force corporates to question buybacks.

If there is no justification for the rate rise, and alot of data looks transitory to flat/weak, then we are arguing the economy is weak. Well, if the economy is weak and the indicators start pointing to it, QE4 is on the tables and a long term short trade a lost cause. Thankfully CPI lifted at last report. Needless to say, no matter what the Fed say, if inflation dives they will initiate QE4. They are fully committed, they will have to remain committed. There is no unwinding from this course. Look at Japan.

Bernanke said it clearly. He will never see normalised interest rates in his lifetime.

However, saying this, a market shock at these elevated valuation levels, with liquidity at worrying levels, will most likely see a quick downside move. There is no more real demand on the buy-side except for corporate buybacks. Hence, why we're seeing the market fatten and the move down post earnings releases in Oct 14. And a shock might come, when the oligarchs need it to for political reasons or they have exited equities and ready for the bear to rape and pillage the common folk once more.

Watch the dollar. The real risk is on bond carry trades unwinding when the dollar gets stronger. The contagion from this is far reach to every geography, industry and asset class. Oil is a by-product of the real $ play. Equally, $ plays a major role in forward inflation (QE4 indicator) and it's the prefered choice of weapon in the unfolding geopolitical changes.
claydoctor BobbyBlueShoes
Also... US bond funds could very soon become the yield vehicle of choice, from everywhere to here, especially when junk bonds crash. Rotation from stocks to bonds could ignite the equity sell button. Watching these oil deals, nuke deals, and seeing very possible much more oil flooding the market. Lower oil holds inflation in check until _______________ (some event that reduces supply) because there is no way more demand will happen in this contracting world economy. And if you want to say its expanding a little, unless it surpasses 2% inflation, even if there is more growth, it won't matter unless we reach escape velocity. AND, drum roll please... If we don't reach escape velocity, any rise in oil prices pushes us over 2% inflation, which will send all the bells and whistles going at the FED to raise rates, BECAUSE THAT IS THE ONLY THING THEY CAN DO. And you know what that means for equities.
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