Exceptional clear view of the market, great job by Andy Dufresne
It looks like 1080 on the S&P is an intermediate-term high, with the potential to become a major multi-month—dare I say year—high. Sell the pigs that flew the highest in this rally now.
To sell the rally you must have tried to buy it first—the other option is a perma-bear situation that is not advisable at any point. Neither is a perma-bull.
I have tried to buy it, therefore, I sold it a couple of days before we hit 1080. How, it’s not important. The more important takeaway here from an intermediate-term perspective is not to short bonds, to look to sell equity rallies, and to look for bond spreads to widen for the inventory rebound that the economy is experiencing is running out of steam. Complicated Numerous strategies that fit those themes can be easily devised.
The next leg down could retest or take out the low on the S&P 500. Book value on the index is in the 500s and we have seen it trade below book value before. Whether that happens in 2010 or much later, I cannot see that far…
Here are some charts that are beginning to show that major turning point. Markets can deviate substantially from the underlying fundamental picture, but they always gravitate back to it.
continue reading on ZH
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