This note is to Janet Yellen, her other Central Bank Proxies and you my fellow investors.
We have what looks like a left translated intermediate cycle top unfolding. Rather than bore most of you with what that means I will be brief: It is very bad and means the market should fall apart here and correct. It should take out the December low and then some. However, I am a suspicious man and I also believe that Janet and her cadre of traders and technicians see this set up as well. If they were to act to erase this set up they need to do so soon. I expect a few well timed phrases and perhaps some rapid fire E-Mini Futures buying via a proxy either tomorrow or Thursday.
The invisible hand is no longer invisible. I see you Janet! Make your move! However, if you intervene and the rally fails to stick then you have lost control. If you do nothing then we know you are finally letting this market go. If you succeed in your meddling then we shall be seeing this same scenario playing out again in a few weeks. It looks like we are getting close to forcing your hand. Let it fall and be free of this burden or announce QE4 too soon and risk the dissolution of your institution by having to explain to a Republican Congress why another QE was needed if the economy was so good.
As I and others on this site have mentioned recently the only play here is to be short until the market is much lower and Janet has cover and more data to announce QE4. Then get long for one last hurrah.
The market forces of deflation are finally forcing your hand Janet. How are you going to play this? We see you Janet!
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unless credit deteriorates from here (possible) it is supportive of a bounce at SPX 1965ish
another 540mill SPY BOW at the close yesterday, on top of the 2.2 Billion the day before … Yellen is tipping her hand
Juice,
All bounces should be countertrend and fail. Unless they stop it.
Blue you got any index puts?
A good correction from here until the ECB meeting sure would help them start pumping QE out, which would result in a substantial rise, until it peters out and people realize ECB QE is only going to make things worse because of the structure and the market finally crashes 09/14/2015. 😀
I hope she does not jump in ,were a little
overdone at the moment anyhow. If she does come in though, do a Bernanke ,when no one is expecting it.
I have been wondering when investment research analysts, institutional investors, TV stock pundits, and mainstream media, start getting on board with the “Deflation is bullish argument.”
Perhaps it will start with some goldman research soon.
The argument could be akin to
“Deflation is a lowering of prices. Deflation is bullish for the economy and the markets because it allots people more purchasing power. It counteracts and acts as a remedy to overall stagnant wages. For example, people who wish to own stocks can buy more stocks. People who wish to buy a different car can buy a different car. People who wish to buy “X product or Y service” can now afford to do so. Markets will fall for a brief period of time. However, there will be a point of equilibrium where buyers of stocks begin to outweigh the sellers. This point of equilibrium will be when the multiple has compressed some making equities cheaper from a fundamental perspective. Thus, more inline with future growth expectations. Therefore, deflation is an overall net positive for the economy and markets because it counteracts wage stagnation.
Then the analysts and pundits will try to manage future growth expectations.
The cycle then continues. “Once more purchasing power is allotted and utilized, an increase in growth is on the horizon quarter to quarter as people begin buying stuff.”
Am I out of my mind and completely nuts?
@surplus, The talking heads HAVE to be bullish their livelihood is predicated on keeping investors in the mkt for the long run so that they can sheer them for fees.
Long term is ok until you need to retire and you experience a 08-09 scenario, then you are very short term. The key is to tactical and just make hay while the sun shines and then pull back when you need to. Its all about sequence of returns for the retail client. Pensions/endowments are in a different game altogether they ARE long term.
@jimmy_two_times
Indeud! Well said!
Surplusdroids
The problem of courses if it leads rapid
wage deflation but I think your on point.
I would submit that wage deflation has already occurred to a large extent. Entry level manufacturing jobs that used to pay $17-18+/hr are now at $11-12.
heaterman
Good point
Wage deflation = layoffs. What o’ what will our glorious Congress do now that they can borrow 30 years at 2.43%.
I think the really interesting scenario unfolds not when central banks move the market, but like you said: when they fail too.
At that point all bets are off, as it will become apparent to all that the “bullets” left in the CB gun were all blanks.
Someone may try negative interest rates (and no I don’t mean effectively negative with 0% yield + fees but literally negative) just for shits and giggles.
Sort of feels like the bears missed their
chance today.
Bluestar,
What’s your take on $GPRO. I think its worth $23. Any thoughts?
surplusdroids
Deflation is never bullish…ever
Cover yer shorts, for the Sir Dennis Gartman is now short of stocks!
Superpositron,
I own The March 115 IWMs puts
superplus droids,
For owners of financial assets deflation is the bane of their existence.
TJWP,
See my next post, Every CB for themselves. the game has changed.
TheHarper,
GPRO will not do well in a bear market. It is a one product company. Usually end in tears.
Great essay. I need to stand up and clap.
hybullshit,
Thank you.