If I were to use a reference in popular culture to describe what’s currently unfolding in equities then I’d probably point at Walter White walking into the local drug kingpin’s lair with a bag of fulminated mercury in his pocket [episode 1-6]. Up until this point he’s merely been toying with evil, skated around embracing it, conveniently rationalizing his growing series of illegal activities and the drama he is about to unleash.
I’m having a rather brilliant morning down here at the lair. Imagine my silly grin as I am watching King Dollar stomp all over the monopoly money they’re still pushing as a possible reserve currency on this side of the Atlantic. Honestly I fervently hope Merkel remains glued to her chair all the way into October 2021. Because if that happens the Euro is most likely going to trade at pennies against the Dollar. That is if I hold out this long over here as things are steadily starting to turn South on the Iberian Peninsula. In the meantime I remain long political drama and short the Euro.
Volatility is continues to reverberate through equity markets evidenced by fickle participants who hastily take profits after one or two sessions of directional tape. And most likely this is the new normal that we need to come to expect. If nothing else then the erratic swings throughout 2018 clearly tell us that the easy days are officially behind us.
With the 2018 midterm elections behind us it seems that investors have regained their confidence in an effervescent future for U.S. equities. The Zero participation signal during yesterday’s session remained solidly bullish with only brief dips below the zero mark. Be this as it may, at least thus far the post election short squeeze has nicely benefitted our long campaign, rewarding our early entry.