Up Up and Away

On Friday I posted we had a Bi-Polar market and I expected 1-2 days pullback with a reversal higher as a potential.    Other is a market breakdown below 2790.   Today is positioned we have an answer, we need to close above the fibonocci line below (SPX ~2350) to have a definitive answer up , up and away!

I expect the end of this run is a failed new 2020 high OR a new high followed by a failure.  My gut says now we will make a new high, and once the bulls win, the question is, what now?   Do we go higher now that the negative (bear) investors lost?   What is there to look forward to for PE ratios and earnings?

Right now this market is basically a battle of people who short/bet against the market and the bulls, with the market.   As the bulls 'win' bears cover.  I see potential back draft as the year drags on.

First, as people are granted delaying paying bills, financial, real estate, etc, those companies will have less to re-invest into assets as the 'cover' for people under financial hardship. 

Second as the FED Chairman himself said, we are causing long-term damage to the market and this won't get repaired until end of 2021.

Third, COVID-19 odds are, will not be solved until at earliest spring 2021.   Yes. we have a potential to solve sooner, but the history and odds tell us it won't be here that quick.  As I write this Brazil is reporting 17,000 new cases a day, and reality is probably 4x higher.  Most governments face political backlash and do under-report.   Afghanistan is reporting a rise in cases and thats a warm country.   So I do expect some new bad news to hit the scene one of these days to question the worst is behind us.

Fourth the free money from the FED will run out, and congress will need to issue new free money.   Here is a critical piece that may dictate the market will never see the lows in March.  All that is required is we never stop deficit spending in the trillions, and keep doing this until the spring of 2021.  Then we can face the consequences of the spending spree, hence my doubling down on gold miners, bitcoin miners.  These are companies that have earnings, and will provide higher earnings as people react to the big spending.


So keep nimble! The market is about to enter into a dangerous climb from here to a new high.  I'll be trading in and out without updates as I have no faith this will sustain through end of 2020.