I think the market have front run the Fed to such a point that they may push back a bit to give them room to keep buying bonds and and MBS and sell the volatility to keep their hedges in place. My personal view is the vol crash this month is too steep to maintain, and the Fed is going to have to whisper words of concern to get the market out of this feedback loop.
IEF and VIX-X have diverged from SPY, gold got smacked, and that flashes a warning to me that equities are next. I wonder how much short covering in SPY the AAPL pair trade is still left.
I am still in the camp of ultimate new highs, but am expecting a nice retracement very soon. It will be difficult for me to be long going into the Fed meeting (won't be short other than some VXX), Even if I am wrong and the market pops, how much is left?
GDP at 1%, no wage growth, no employment growth, no inflation, max margins, everyone is keeping their currencies weak against the dollar. We are already up over 10% from November, with 2% profit growth this quarter. 5-7% more brings us up 17% in three months, with the SPY on a french curve chart, that screams crash.
I see the SLV chart of 2011 as an analog to SPY. An unsustainable move that no one sees ending, that retraces a bit, then a push to new highs to really get the juices flowing, then down to earth for the next two years.
Thanks for your contributions, Bob.
ReplyDeleteI think the metals market is on tenderhooks and the bug blogs reflect a beat-up lot. Most were in way too early, NOV-DEC. Now with valuations, particularly in the $HUI, at a low-risk entry, few have the gonads to push these levels higher.
It's make it or break it time.