25 Basis Points…Seriously? Game Over!

Much ado about nothing here really with this 25 bp rate nonsense.  Bottom line: Why has the average manager struggled since the beginning of 2014?  That was when the QE taper began.  After QE 3 ended in October of 2014 the broad market went sideways until the top on May 19th.  So without QE the market will continue to go lower and stock picking becomes essentially irrelevant as correlations rise to 1.  Raising interest rates or not will not save this market.  It really doesn’t matter what happens tomorrow because the bear market is already baked into the cake.  You see we would have collapsed sooner except the Fed and Washington commanded our vassal states of the ECB and Japan to carry the monetary baton with their massive QE programs.  All that did was to prevent the US markets from imploding sooner.  Now we have currency wars and the former cooperation of the Central Banks has turned into everyman for himself.  Essentially we have been tightening monetary policy since the QE taper began.  The strong dollar has been a signal that we are going to see a global deleveraging.  It has begun in the emerging markets and is coming our way and has already begun.  So you see this 25 bp debate is noise.

The bear market began on May 19th and the character of the market began to change then as well.  The topping indicators I use would form divergences prior to that and would top weeks later.  Now we are topping almost simultaneously.  The V rally seems to be dead as well.  What sealed the deal to make this an official bear market was the the advent of the Dow Theory Trend Change that occurred on August 21.  What that means for me is that rallies are countertrend and the primary trend is down.  I am not a day trader I am an Investolator.  Part investor part speculator.  I hold my shorts for longer periods of time and use options to swing around tactically.

Here is the current situation.  All my voodoo and chicken bones (technical and cycle stuff) are pointing to this being a countertrend rally within a bear market.  Additionally, given the length of this manipulation by the Fed, my initial price target by year end is 1500 on the SPX which is the 2007 top and the level at which QE3 began.  We are essentially going to erase the crack cocaine high.  It will be quick and violent.  I believe the second down move will begin very very soon (test August lows and possibly go to 1700).  We are extremely overbought, many of my indicators are rolling over and the Boyz have managed to engineer a short squeeze before this non event.  Every Johhny come lately bear wannabe has been squeezed out.  Most of you don’t know how to short.  To play this game you need to be short before it rolls over.  The moves down will be swift and most of you will miss them.  I get excited the higher prices go as my indicators peak.  I get sad when the market goes lower and I have to cover.  I am at maximum happiness right now.  By the end of November we should be much much lower.  The only thing that makes me scamper away like Gollum is a new QE.  I have news for you they are not going to do it.  There are geopolitical aspects to this that I care not to go into but I believe the stock market is about to be sacrificed for the bond market.

Remember we are in an equity bear market and  it is GAME OVER!

 

 

 

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