Lofty Levels Seeing Chop Trade

FED SMCCF Ignites Pandora's Box

With the Federal Reserve announcing the creation of their own “Broad Market Index” of eligible corporate credit to subsidize, it’s no wonder the equities continue their insatiable ascent. It’s almost becoming comical the list of facilities the FED has on their weekly H4.

In fact Magnelibra’s databases can’t even keep up and with all the tweaks virtually every week, flying by the seat of their pants, seems to be an understatement. This picture comes to mind when pondering the FEDs daily meetings and how everyone must feel:

We have warned for quite some time about the inverse square law and as the debt becomes so large it seemingly becomes worthless and fake, yet value arbs will continue their interest rate arbitrage ways as long as the Central Banks play along. Or shall we say, as long as the human collateral plays along. Anyway with all these new facilities, get ready for a massive influx of < 5yr maturities as every corporate treasurer is going to get into the game here to fit itself into this new FED bucket:

So where does that leave the equities? Well the SP once again spent Asia and EU session in bull mode to only be whipsawed by NY cash open. The Fib area of 3113/3119 seems like the chop zone:

We aren’t quite convinced they are finished beating people up yet. The EminiSP has a reversal target up at the .786 at 3168 area and that is our real key folks. We would like to see that reached and a fail close below to complete this rally:

The GFBP Position Tracker will most likely cover a bulk of the short equity or even go flat, we have some time here so will update as to the ending position, but this rally and chop may lead our indicators to liquidate the current Hedged Short, we will keep you posted.

-Magnelibra Econemotions

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