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Gene Inger: The Inger Letter- September 4, 2015

Gene Inger

Gene Inger


Gene Inger's Daily Briefing (highlights)- for Friday, September 4, 2015                      

Thanks to ECB 'puffery' - about more potential Quantitative Easing; markets in Europe, and initially (if illogically) for the US, ran up in a swift sharp move in today's (Thursday) trading. It is therefore with appreciation to Mario Draghi's remarks about things moving 'slower than they anticipated' (evident to some of us all year); that we see the same monetarist mentality continuing to prevail. 

Why anyone would conclude that helps US equities, or reverses Fed policy; is beyond me, but they did. Hence the swift rally; we were thrilled to to see. That is as by midday it allowed us to be short Sept. S&P / e-mini at the 1972 level. 

(A series of trailing fixed mental stops allowed us to stay short all day; and in this case, believing the Labor Data would NOT help regardless; and traders in most cases wouldn't be thrilled about being long ahead of China reopening n matter which way Shanghai moves before Tuesday; we retained our short for overnight prospects. Entirely glad we did obviously; ahead by an incredible 50 handles or so at presstime for this delayed summary to guest readers.)


After Thursday's first drop; the same Head of JP Morgan Quantitative Analysis came up with a follow-up to his warning of last week; which directly countered Morgan Stanley's 'all-in' of 2 days ago in the final part of the rebound. I discuss all this in tonight's main video (for subscribing members only of course; by the way the Labor Day 'holiday special' of a $26 Daily Briefing & $50 MarketCast rebates for new subscribers only, made in-anticipation of more volatility, comes to an end Monday.. rebates promptly posted to your card or PayPal account). 

In any event Thursday downside acceleration followed. While specifically I'm unable to connect the 'Quant's rant' to the further sell-off; that did correlate, and we were already positioned perfectly short at Sept. S&P 1972 for a falter.

There is technical significance to Thursday's reversal. So why stay short at all overnight? Because the Jobs data should be sold into if it's poor, and they rally the stock market (old 'bad news is good news' characteristic that prevailed months ago). Any such rally should not get traction; and perhaps be a variation of Thursday's 'Draghi Puff' snapback. However it's likely a fairly weak report.

Bottom-line: (long video; no need to elaborate) stay short or stay out; and do expect any early snap-backs Friday to fail. (Redacted for members only); so with enough downside gain or cushion, we felt traders could take overnight risk by staying short September S&P / e-mini from the 1972 level. 

Daily action - as noted has us with a (so far superb) downside 30 handle or so gain on the Sept. S&P /e-mini 1972 short-sale initiated Thurs. morning. This will carry (reserved for subscribing members; it's way past the top; but please join.. even if you're interested in when we reverse to bullishness further-out).

(Comparative technical patterns reserved for members only.) As Friday opens in Asia (China remains closed); Japan's Economic head says 'it's important for markets to act calmly, not move in a volatile manner'. Ha. I can only say: well, there's no surprise in the reaction: a plunge in USD/JPY and 100 point plunge in Dow futures here Thurs. evening. Hilarious; they never learn that you don't tell people not to panic, or risk that they will indeed panic.

With China opening next week; with President Obama holding fish spawning on him in Alaska, at the same time he can almost see the Chinese Navy ships between him and Russia plying the waters of the Behring Straits, and we have heard, actually penetrating US territorial waters, it's hard to imagine (more).  

For now the preliminary overall Friday forecast is down-up-down, 'excluding' what we will call knee-jerk reactions to the Jobs data. Lots more in the main video; and the second video describes a bit of how we got to the technical or pattern point, for this significant S&P downside gain so far. 

Prior highlights follow:  (again we'll not share prior night comments; as they show a very long-term picture outlining our projected macro outcomes).             
Smart money flow (charts are also redacted; we showed them twice recently, and they were correct in how funds were withdrawn ahead of more carnage).

Rising skepticism encounters 'invested' managers unable to be defensive. So they periodically throw leverage at this market (cash is limited), thinking they might as well since with a further decline they'll be toast. The reality of price levels out-of-line, even after the break, vs. realistic growth or monetary policy guidance, isn't diminished. 

Treacherous times. The process evolves.

Enjoy the evening (and join us);

Gene Inger
www.ingerletter.com