I stand by my view we are reaching a top with a significant move to the downside. I expect potentially 10% more move up before we trend down. This will enable taking money away from those betting to the downside, shorts, and forcing them to buy shares to cover their positions. In effect, the people who rode this market for what will be a 80% retrace to unload their long positions into the capitulating short sellers.
Since neither I or anyone can tell you the exact top, it's impossible to play the long side safely. But it's important to set thresholds to know when I am wrong. For me, this one isn't going to be market valuation, but time. If Trump is elected president in November, and the market hasn't turned down, it is possible that stock values have decoupled from corporate earnings. This means stocks are pure speculation. In effect we will have destroyed the basics of capitalism, and our market will be more like China.
We will have decimated 95% of the shortsellers, in effect not having anyone to 'buy with greed' when the market falls. We will only have 'sell with fear' .
The Fed will have helped achieved what China or Russia couldn't do, decouple the US economic engine.
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