Investment Capitalist

Market’s appear strong overnight. Around 16 handles at 9:30pm EST. SPX resistance at 950. If market opens around 950 on the cash index, fade the gap up using SDS & SSO (short), DXD/DDM. Experiment with trading just one ETF class with larger size.  On the long side, stock selection is key. I want to go into next week with an aggressively bullish mindset….but I know I should allow the market to tell me. However, I feel like the market has already spoken, with internal/breadth indicators giving early buy signals last week. The market is no longer overbought. In fact, it’s now deeply oversold. The macro backdrop, when looking 9 months out, is EXTREMELY BULLISH for US equities. Remember 1991 election, when Clinton won, the economy was in the toilet. This is a repeat? Much more stimulus and liquidity this time. With the war wind down, that capital will be allocated to social spending programs, which will light a fire under this economy unlike any other ever experienced. Keep focus on yield curve. Nasdaq wants 1850-1900.

SPX screaming buy on long-term monthly. 930 is the breakout which started the rally in late ‘02/early ‘03. It was never tested. This is the first test after the market made a new all-time high in October ‘07. Market “COULD” rally 30% from here.

China announced massive stimulus, pushing global market sentiment higher. Chinese stocks are deeply oversold, more than any other country, so the risk/reward here should be enormously skewed. Chinese have a pattern of using financial instruments like stocks to stimulate economy.  Last week, metal & mining stocks started to rally early, before broader market caught up. The reason at the time was a mystery. Sunday’s stimulus in China was the reason. The Chinese are also notorious for trading ahead of the news. Dry Shipping sector also benefit, along with producers of the items being shipped. Will this affect entire B.R.I.C. group or just China?  Combine this with the massive and unprecedented cuts in interest rates across Europe and Australia, the global economy is being flooded with liquidity. At some point, that liquidity will have start circulating.