Market Thoughts – September 11th, 2016

What a friday. Nothing I wasn’t expecting to happen since August. Check out the beginning of my post last week or my first post on the site.

I am not convinced the selling is over. I don’t expect a Brexit type V-shaped rally back. The excess long positioning in ES and short VIX futures by all parties – commercial and non-commercial  – will need much more unwinding. Especially the bubble in yield based assets, and bonds. Last I read for the first half of 2016 investors pulled $64B from stock funds and added $104B to bond funds.  Urban Carmel posts weekly inflow/outflows on Twitter all the time for those interested.

I am long TBT myself and this is the only position I held as of last week. It’s tough to argue that yields aren’t going to rally higher after the failed breakdown. Just remember we are in a 30 year bear market, and the yield curve is massively inverted. Just a counter trend rally here, but with large implications in my mind. Excess bullishness towards one asset doesn’t turn out well. Considering  T-bonds are putting in a false breakout above a monster  uptrend channel.

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As John Murphy noted in his Market Message, yields abroad (more risk-on) were heading higher ahead of domestic yields signaling what could be coming.

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It’s going to take a lot more of crashing before people realize the bubble in “yield” assets, just as rates are about to head higher. I highly advise only caring about market price action, and not what CNBC has to say. Because they are wrong. And always will be. Forever.

In regards to the FED, they should shutup for their own good. Sure rate hike posibilities come and go, but I don’t see them acting before the election. If they do in September, it will only add to market volatility. I see it only as a move to show they haven’t lost all credibility (which they have) and to have a higher federal funds rate number to decrease from come next recession (which we could very likely be in right now).

While I am neutral with a bearish bias toward stocks and precious metals in the near term, I am not concerned with making money on the downside. I have learned in my short time shorting is a headache unless the setup is super clean and begging to be taken. I am waiting for the next setups higher, whenever they may arrive, if they do. Recent action has been super bullish, but you never know if this action above ATHs could just be a fakeout.

Otherwise, I do not have much to share in regards to actionable charts. I have been nimble lately in my positions and after friday I am not chasing anything at the moment. Lets see what this week brings.

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