Do you remember what happened in the market at this time last year?
Markets were dealing with the end of QE2 and we had been moving sideways and under Distribution for several months. Then suddenly and out of nowhere the market ran 80 SPX points in a few days in a “Magical Mystery Rally”. The circumstances were so bizarre and unexpected as to excite market participants into thinking that perhaps the economy had turned the corner.
But it was not meant to be. In fact the SPX rally began and peaked ALMOST EXACTLY where it is now.
The reason for last year’s Magical Mystery Rally was that Reality was perceived to finally be setting in and there were significant bets made on the short side. Does that sound even remotely familiar?
This year is a virtual Carbon Copy of last year technically. And fundamentally it is worse. But there are no worries because the Markets have been “RingFenced” by Central Bankers, just like the Banking system.