More Big Picture Thoughts

Central to the severity of the macro problem the economy and market face is the underlying fact that the issue is  “leverage piled on top of asset values that were well above long-term trendlines”. As the asset values decline to trendline and below, there is going to be a much bigger effect as the leverage unwinds.

Short-term, look for markets to have technical bounces, in the stock market we now view an S&P value of 1339 as the big point where you will want to unload all longs and if you are a trader you will want to get short.  Commodities and gold should have bounces also.  The Russell 2000 is acting much better than the S&P 500 because the S&P is weighted down with financial and oil stocks.  In our opinion financials will not take out recent rally highs, oils will bounce and on that oil bounce the S&P should see the 1339 level.  These bounces should occur over the next two weeks.

8:47 AM CDT

TRADING Update at 9:15 CDT

We covered our short gold, oil, and commodity positions this morning.

TRADING Update at 10:50 AM

We are buyers of the S&P 500 at the 1276 level, goal is a big speculative bounce.