Topped out. Went short tonight

Spectre2007 said:
Put it in reference to the only market that matters to the FED, if they keep pushing equities up, the bond boys have to keep pushing interest rates up, in order to have high bond prices and high equity prices, equities are hit on a temporal basis. Even a 1 year downtrend cycle before consolidation and ramp back up. As you approach the ATH, valuations on most equities will be far higher than previous boom bust cycle. Earnings need to keep up so the 2400-2500 level can be reached. If earnings don't cooperate, than the Apex Predator may choose to slam equities down, to the previous humps on Spooz at 1600. At 1600 a new bull market can start where valuations are within past metrics. The sentiment is that most cash if they think its garbage at present levels will not be pushed into more garbage looking equities at 2400-2500. The only investors are the periodic, 529's and pension fund allocations by money managers. We are looking at 10 year interest rates at 1.9%, while Japan is going more negative. If there is consensus on global equity trends higher, than Japan will try to normalize interest rate policy. The BOJ intimated at the last meeting no more more negative on policy. Everyone will pile into the Yen, most likely bringing the cross down to 80. So pattern has been to bust the yields lower with global equity carnage and than rescue them back over 6-7 year period. I would imagine ten year notes at 1.5%. In order for the 10 year to hit 1.5%, equities at some point or another will need to be hit.
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Let's imagine for a moment, that the bond-market bubble ends and prices start to normalise. We know that it won't take much to create losses that will wipe out the capital of some critically important commercial banks, but we like to think the ECB is on top of this problem. Very few people seem to be are aware of the crisis that falling bond prices would create for the ECB itself.

The ECB's equity capital at 31 December 2015 was €7.74bn, supporting a balance sheet of €256.645bn, a gearing ratio of over 33 times. The wider euro-system's accounts, where the asset purchases accumulate, has capital and reserves of €98bn supporting a balance sheet of €2,872bn, a gearing ratio of 29 times and rising. As a rough guide, an interest rate increase of less than two per cent, to as little as one and a half per cent, would undermine the value of bonds and related risks at both the ECB and in the euro-system, to the point where they would require further capital injections. For some context, if the yield to maturity on a five-year bond rises by 2%, the price falls roughly 10%.

Now we are getting to the truth as to why the ECB's debt bubble must be sustained. It is no longer to support economic growth. A deflating asset bubble will take down the ECB and the wider euro-system, just as the Mississippi bubble took down Banque Royale. And in both cases, the confidence vested in these institutions is reflected in the purchasing power of the money they have issued.
 
athlonmank8 said:
Watching this (2026) and 2010 for next week. Nothing planned for trades after getting stopped out. If 2010 breaches that'll be good for the shorts. Will get interesting if this week closes red.
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lol. Yeah it's crazy. Can't last forever. 4 FED members now think a rate hike should be on the table for April. Might be enough to spook markets again.

Also, 4th bounce off this 2027-2029 area. If we breach it tonight it should trigger some big stops.
 
athlonmank8 said:
lol. Yeah it's crazy. Can't last forever. 4 FED members now think a rate hike should be on the table for April. Might be enough to spook markets again.

Also, 4th bounce off this 2027-2029 area. If we breach it tonight it should trigger some big stops.
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"Open mouth operations"...they are dovish until SPX hits a certain "target" or level that they feel is sufficient and then the hawkish comments follow...Really, this is nothing new, it's been ongoing since the end of QE...they cannot raise rates aggressively enough, so they jawbone the market from all angles..."NIRP" was thrown out quite frequently down at the lows...so what changed between Feb 11th and today that would require a shift from potential NIRP to raising rates again? i.e. nothing more than the price of the S&P 500...
 
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