Beware the Ides of March - indeed; as Friday proved my point of Thursday being just an increasingly-focused bearish bias shorts, able to be run-in, but with no particular follow-through on the upside. Other traders see that (Friday morning a good example); and realize that short-covering, not solid buying, were at the heart of the prior day's rebound.
(The above) brings into question pundits proclaiming 'no systemic risk', when to a degree there are multiple systemic risks; domestically; globally, and even in the trading system (more). These combine to put markets 'at risk' (more).
Global finance right now is a sort of 'Potemkin Village'; an impressive facade designed to hide an undesirable monetary condition.
I have termed this a 'controlled Depression', rather than a 'real' recovery, for awhile now (more). Risk has been shuffled to the public sector; thus (more).
This is financial 'repression', and it's drained funds to levitate (or manipulate) asset prices, while the private sector is minimally assisted. It's dangerous and as I've said before, what recovery we've seen is in-spite of the Fed, not due to it's efforts, aside the initial emergency moves.
An Expiration week is forthcoming; and some associated volatility. Basically it appears that rallies are short-covering squalls, with certain hedge funds said to be heavily (in positions likely impacting the upcoming trading pattern).
Daily action - was defensive from the get-go Friday; and not surprising at all. We expected 'hot' February to precede a 'cold' March; and the last two weeks haven't disappointed. Solid if not enormous downside gains achieved by our S&P guidelines; and the little semi-plunge-protection rebound late Friday tells nothing about the bigger picture, (but something about the week ahead).
Our main video is thorough; and the morning one goes into backdrop as well; so no need to expand on any of this now. You all know the concern; as well as watching what for us is a longer term uptrend of over a year in the DXY; so don't grasp why many only now contemplate simply-ongoing impacts.
We hold short a June S&P guideline (adjusted from March at 2116). Intraday flat over the weekend. Please view Societe Generale charts the Daily Briefing shares. They should be sobering to 'uber optimists'.
Bottom-line: stock markets remained on borrowed time; giving trading room prior to challenging lows of the last couple months. More volatility ahead.
Rebounds kept occurring because of fear, not optimism. They wouldn't let go, which took us back to: 'something's got to give'. Even after this break, it remains a treacherous time, even if they say 'risk isn't foreseeable', or that there's nothing systemic to point to (yes there is, as we've outlined).
Enjoy the trading week ahead!
Gene
Gene Inger
www.ingerletter.com
