The Credit markets are not buying the optimism of equities. There is a good chance that the equities markets have already topped out, with that August crash being the first death-blow to the over-grazed Bull. When you take out four companies (FANG) the S&P would be down 7% this year. The market is being held up by fewer & fewer stocks participating. The narrowing of breadth such as this is a very troubling sign.
I believe that we are in a primary downtrend. The trend remains lower. However, October was one hell of a Bull run & last week was a massive rally, no doubt helped by Fed jawboning. The counter-trend rallies have been violent & everyone is getting whipped around. Discipline is crucial in this roller-coaster environment.
I believe that THE Trade is to hold short equities for 2-3 years & that is the strategy that I am attempting to put in place. However unfortunately, in these early stages of the trend bending down, coupled with the insanity of the day-to-day equity algo-casino I am getting whipped around.
Despite the resilience of equities. Bulls have had many chances to break us out higher & have failed every time. There has certainly been no shortage of Fed intervention or Financial Media cheerleading. The fact that all major indices are essentially flat to down YTD despite massive whipsaws & huge drama indicates one thing to me: The Jig is Up!
All signs point towards lower in the weeks & months ahead...