Wednesday, April 15, 2015

Q1 SPX update and Review on calls - April 14, 2015

Two weeks in Q2

Lets review from previous post on performance:

Feb 4th 2015 Post

Jan 23 2015 Post

Formalized from jan 23rd expecting big correction, qualified in feb 10% correciton in US equities needed.

Thesis still in play:

  • Resistance in play
  • Short term strong closes below 50 SMA
  • Big test to see price stabilize below 200 SMA
  • Series of Higher Lows
  • Sentiment in line with interest rates and FED speak

Fundamentally weak support going into corporate earnings. Whats to drive prices higher in short to medium term? 

  • Theoretically weak consumer. 
  • Energy sector weak
  • Financials so so
  • Utilities? 2014 trend positive
  • Healthcare?
  • Tech?
Not enough positives to push higher. 

Is contigon from Europe a possibility? Psychologically and technically yes only imho. I see 10% drop only as a price correction in the larger bullish equity trend. We will need to see macro correlations consistently disappoint to see a sustained down trend to end of year. 

Get the feeling we see correction and year ends flat. 

*Side note: Greece needs to blow up and leave the eurozone. Too much at stake for whole system to tank. Cut the cancer and move on. Short term will be bloody and messy but we need this shock to the system to correct fundamentally. Will be interesting to see how Iceland moves forward as well given different trajectory and path post blow out. 

Clarity Conclusion:
  • Still expect greater than 10% correction in 2nd quarter
  • Once it occurs need to assess fundamentals and sentiment closer
Long long term is up, short term and medium bearish (long long = year to years out and short and medium equals one month to 6 months)

Need to see broader picture too relative to other financial markets and other global markets to gain more context.

Above is more or less a pure technical play with some brief fundamental/sentiment considerations based on headline skimming

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