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Gene Inger: The Inger Letter September 18, 2015

Gene Inger

Gene Inger


Monetary policy slowing 'crushing' - private sector economic recovery, was one reason to have preferred a Fed 'hike'. Behind the scenes Fed folks likely 'get' how they overstayed an excessively easy 'emergency' policy posture. To the investing public and the Press, they will only shuffle the blame over to (for sure part of the problem) China, and not admit how they inhibited US growth. 

However the Fed 'remarks' helped our projected spike if they didn't move; an up-down reversal call, with our Dec. S&P 2008 short-sale guideline; indicated to intraday MarketCast members minutes before Thursday's market plunge.) 


(Projections about earnings, CapEx, Business, pension and banker behavior, reserved for subscribing members.) All sobering to those heavily long crowds.

Bottom-line: low interest rates for so long impede demand. Counterproductive Fed policies about at their worn-out end, with realization (redacted). Ultra-low rates hurting middle America, facilitating institutions, and enhancing prospects for Wall St. to reassess again (for members only).  

That 'keyhole exit' of August resulted in a 'flash crash through 'no-mans-land' as I called it, and the stretched-out 'automatic rally'. FOMC and Expiration are now behind, market will struggle, but is potentially (rest for subscribers; but you are aware we're retaining a Thursday Dec. S&P / E-mini 2008 short-sale).    

Daily action -  included an crucial post-Fed guideline: a short-sale on spiking S&P, about as envisioned Wednesday in-event the Fed held back on hiking. 

About a minute after sending the post Fed video and suggestion to short that spike, the Dec. S&P briefly hit 2012, spiking and fading rather quickly. Hence we estimate a short-sale guideline more or less about the 2008 level; and held it overnight, with a mental stop at approximately the 2008 break-even level. (As it's ahead by well over an incredible 50 handles Friday afternoon; we'll decide as Friday evolves whether members might consider retaining it beyond.)

For months, besides properly recognizing distribution; denoting buybacks for what they were (artificial ways of firming earnings by lowering float and raising leverage with borrowed funds, but about the only game in town in a lower rate environment at already high market levels); we'd pointed-out 'factual' not rising growth delusional expectations. 

This matters, because now 'others' will finally conclude that they can't obtain adequate 'demand' from society, or growth in earnings and revenue organically (without buybacks) for most stocks. Why? (Discussed with subscribers only.)

Technically- the pattern right now is increasingly dangerous. Trapped Bulls in stocks are really at-risk in a potential 'Deflationary Spiral'. Should that occur, it would perilous for (particularly types of markets as noted to members).  

Bottom-line: rallies are going to occur; but with even the Fed coming around to realizing (but not admitting) their policies are retarding recovery efforts, AND a statement about slower-than-projected 2016 and 2017 growth; market are yet again 'at risk', and perhaps dramatically so as we go forward. 

We hold short from Dec. S&P 2008 or so for traders, overnight and suspect a down-up-down (wilder than that) pattern likely on Friday.

Prior highlights follow:  (most reserved as shared enough; outlined this and the market's probable response; and invite you to join as a member. Below is a Dec. S&P pre-Fed chart posted to members Wednesday night.)     

Treacherous times. The process evolves. Likely akin to 'surfing' as it nears what's sometimes called 'point break'. (In this case the rebound rolling over.)

Enjoy the evening;

Gene
 

Gene Inger
www.ingerletter.com