So Many Choices, Only Two Really Count

The Setup

As we watch what Alan Greenspan liked to call the “Conundrum” evolve, we are witnessing an unusual amount of quietness (directionless low order chaos) in the markets. It is becoming more obvious that the market really did throw out a Big Signal on January 26, 2018.  That is the date in which what we like to call the Macro Fracture commenced.

Lot’s of Choices

While there are believers in a whole new bull market in stocks based on a FED QE4 type stimulus, a move that would break the market out of this Fracture pattern, it is more likely that a defensive approach will prove more beneficial over the coming year.  The last major juncture of the markets took place in February 2016 when the low on the S&P was 1806 and that appears to be the major contractor at the moment.

Lets take a look at the three main choices for the current setup

1. First choice would appear to be Gold.

2. Second choice would appear to be short stocks using leveraged short ETF’s.

3. Third choice would appear to be bonds, but that could be a big trap if the FED has really gotten some old time religion on negative rate scenarios.