Once again equity indices have become stuck near important inflection points, which incidentally in my book are key thresholds from which shifts in momentum and trend changes can be triggered.
No matter if you are bullish or bearish – this will most likely be the most important update of Q1 2019. So it’s once again time to forget about the daily noise, take a few steps back, and look at the market from a 10,000 foot perspective.
Between 2009 and 2016 not a single day passed without someone (rightly) bitching about the inherent moral hazard and long term implications of the Federal Reserve’s various QE initiatives. Which after seven long years and several rounds finally came to an end in late 2015, when the Fed cautiously signaled that it was ready to start raising rates again, albeit ever so gently. And since that announcement not a day passes without someone bitching about the Fed’s ‘irresponsible’ rate hikes. Go figure…
So let’s talk precious metals and bonds. Both clearly are markets which, given the unfolding train-wreck in equities, currently look ripe for the plucking. Unfortunately the Fed rate decision announcement scheduled for this Wednesday afternoon is throwing a rabid wrench wielding monkey into my operation.
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.