Gears clashed repeatedly on Wednesday; as traders tried hard to put a positive spin on the FOMC Minutes, with a 2 o’clock rally as expected. I indicated that they should be selling rallies, not buying, for some days, as you know. Today was no exception with respect to fading S&P lifts. I suspect most managers focused on strategies we’re warned were near their limits for a couple months now; are truly flustered here in New York at the thought of being forced to unwind serious income-tactic positions.
More important is the deflection level technically. For now it surmounts concern about ‘when’ rate hike sequences ‘formally’ validate what we’ve thought the market would do ‘for’ the Fed in-absence of an official bump in the Funds Rate.
That deflection level has a lot to do with the March S&P 2750 level I’ve pointed to repeatedly; and even earlier today indicated it would take a miracle to see that overcome or even attacked with the ‘essentially’ drive trying to take the market higher.
The odds of failure were there, and these days nothing stays calm very long; hence you risk these increasingly frequent and swift somewhat algo-driven up-and-down S&P swings. We’ve cautioned all we can.
And that’s the point; this was not going to be a ‘Turboglide’ market with a series of imperceptible shifts through an advanced torque converter; but a clashing of gears as the market finds direction. I believed at minimum more testing of the ‘flash crash’ lows would be required before any solid Spring rally (if there even is one worthy of the term); and that’s why the rather unenthusiastic call for ‘traders only’ to buy the crash lows; and for the vast majority to both lighten-up in-advance of the crash; and then on the recent rebound to sell more.
Markets and strategies shifting into reverse; as gears are clashing.
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