A too Timid Fed, with late update
I believe we are about to see what happens when a Too Aggressive Fed Stimulus meets a Too Timid Fed reaction in terms of the Fed Balance Sheet. This is set to be a fascinating scenario, so much so that what we have seen so far is a big market rally and yet CNBC cheerleaders are still trying to figure out a script for the story.
Using the S&P for a proxy to the market, the next important level to monitor is just outside of the current 4450-4650 SPX trading range, the 4662.7 weekly low of the high week. A close above that level will trigger a lot of upside chaos.
My view, in the meantime as the SPX 4662 level is tested, maybe lighten up on long positions around trading range high area of 4650 but keep your core positions in place. The hardest thing going forward will be how to execute buys if the market gets and holds above the 4662 level.
Tomorrow we will provide more depth on what could happen if the 4662 level is breeched and the back story to that event if it occurs.
Late 2:45 PM CST Update…
A little protection for the resistance area.
From our twitter post: