Funny Money Update

with post employment number update at 10:00 CST

With the SPX run-up this week moving into the 4550-4650 resistance area, we will be watching closely how it acts here.

If the SPX does not breach the 4662 level on a closing basis, the market will die here sometime in the next few weeks and shorts will need to be placed before that occurs.

The story has been told many times, the markets are over-valued but so far there has not been a trigger big enough to get them back to value. It is obvious that the Fed Balance sheet is the primary factor driving the stock market and inflation, but the FED in this election year is afraid to do anything that might cause stocks and the economy to decline.

In the meantime I am trading modestly from the long side to see if the bullish Funny Money players revive from their recent disastrous buy the highs, sell the lows performance.

Most important thing at this juncture is:

Because of the volatility, it is important to let relative strength work for you, buy low, sell high.

Post-Employment number update:

A good number today that is putting upward pressure on interest rates and some downward pressure on stocks. We exited the short side of our current trade which leaves us on the long side for a trade to see if the Funny Money crowd comes in, probably next week, after some more inflation numbers are printed next Thursday and Friday.

It is interesting that the junk bond ETF HYG is taking a hit this week, kind of a sign of a little fear creeping into the funny money crowd, but nothing big yet.