About Profits, the Buck and Stocks
|SOME MORE PROFIT - Some very quick follow through on short US Dollar exposure over the past few sessions. Initially we caught a jump in the Euro and then this latest Cable push. And yet, I have opted to take the profit on the position rather than leave it open at this point. The reason for this is that I am still looking to establish that medium term position short the Dollar, but the follow through thus far hasn't felt right to me and I'm still thinking the Dollar jumps up again before finally selling off. I had said the Euro could drop into the 1.1700s when we first started to see the breakdown below 1.2150 several days back and we have yet to trade into the 1.1700s. I also wasn't crazy about the fact that the Cable trade couldn't poke above last week's high on the Monday rally, leaving the market stuck in more of a bearish consolidation off the lows. And so, the core view is unchanged and I will be happy to get back into that short USD position. I just will wait for another dip that leaves intraday readings overextended to try to take advantage again.
SELL THE RALLIES - Otherwise, I continue to look on to the equity market with interest, though that interest should not be confused with anxiety. The rally over the past several days is still very much classified as corrective in my opinion and I think we remain in the process of rounding out a massive top off the January record high in the SPX500. Technically, we could see a push to 2800 and wouldn't compromise anything. Ideally, the market now looks to stall out ahead of 2800 for the next lower top and more downside. But the key here is a stock market that spent a near decade being bought on any and every dip to fresh highs, is now becoming a stock market that will be sold on any and every rally for lower tops and fresh lows. We are seeing a ramping up of policy normalizations, all pointing to higher rates and all of this happening with the real dagger of inflation around the corner. When it comes, it will come hard and fast and we are already seeing signs of it on its way. I think rates will start to really shoot up and this will send those investors running for the hills. The call is for a move back to 2140 between now and year end, which would be a 25% decline off January's record peak.
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