I predicted at the beginning the year that we would have bone crushing volatility. That has turned out to be the case. For example the IWM has had six 5% moves up and down since the start of 2015 for a total return of 30% if you traded perfectly both long and short. Of course no one has done that so most of us have been frustrated.
We have arrived at the moment of truth as this market is coiled and will soon break out of its range. The next move will be a quick 10% move either up or down and will likely set the tone for the next several months. The battle is between those who believe it is business as usual and that the CB’s have our back or you are a bear and the CB’s are about to lose control. The bulls have to be at peace with the fact that currencies and commodities are seeing 6-10 sigma volatility and that the increased volatility has not caused systemic dislocations both financially and economically. The Bears have to be at peace with fact that they have been utterly wrong for the last 6 years and do they feel lucky this time. Everyone talks about these bears. Where are they? At tops there are no more buyers as the longs have run out of ammo and the bears have run out of capital. Nothing but air below. Is it time for the blow off top or time for a greater than 10% correction? Let me know your thoughts. Do you feel lucky…well do you? Seriously, I wish both bears and bulls good luck over the next few weeks.
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