Shorter and sweeter

SHORTER AND SWEETER - Hope everyone well. I have been off the desk this week quite a bit and have been running around. I am going to keep it shorter and sweeter than I usually do (if that is even possible). So here is what I am seeing right now. I am seeing a market that wants to the US Dollar higher pretty much across the board, with USD/JPY potentially standing out as the one exception. By no coincidence, I am also seeing a build up of stress in risk correlated currencies, which could very well go through another decent period of underperformance in the days and weeks ahead. I apologize for continuing to focus on US equities, but given this analysis and outlook, I think one of the best trades out there over the next 24 hours will be to sell into this latest rebound in stocks. I am going to highlight 1860 S&P as the key level to watch, and will formally recommend a sell at this level if it is tested on Wednesday. Look for a fresh lower top around 1860 ahead of the next major downside extension below 1810 and towards 1760 further down.

FORGET ABOUT EVERYTHING ELSE - Right now, short-term economic data takes on even less significance than it might normally carry, and it is really all about the fundamentals of the Fed and longer-term cyclicals. I strongly contend that it really doesn't matter what happens from here on, and all that matters is that the Fed is on some form of a path of monetary policy reversal, as much as it would have us or even it believe it isn't. I also believe that technically, risk correlated assets are overvalued on a medium-term basis and should be due for relative underperformance. Broadly speaking, I believe the currencies that are traditionally more correlated to risk will be the most vulnerable, the US Dollar will find some decent demand, and US equities will roll over some more. Please don't ask me about GOLD. I still can't figure this market out, and won't even begin to pretend here. Just keep an eye on S&P 1860 as per above, and sell into this level if given the chance. Back to running around again. See you all on Thursday.