Momentum is Now to the Downside

Posted on Dec 16 2014 - 5:44pm by Sharpe Trade

We’ve mentioned for some time that momentum was falling off in November, on the upside rally we had in the S&P 500 Index.

We then said that momentum was gasping.

And then, back on December 12th, we stated that 2020 would not hold on the S&P 500 Index, and we were poised to move lower on said Spoos.  I’ve been saying in my stocktwits stream for a while now I am bearish on the Spoos, and on risk overall.  All of that wasn’t ‘magic’ folks.  Simple momentum divergence on everything from RSI to MACD to %R.  And no, this mornings rally did not cause me to waver in the slightest.

Now?  We have momentum alright. Oh we have momentum.  To the downside.

Russia is a complete mess.  Business Insider reports that within Russia …

“The interbank lending market died today, [the banker stated and] added: ‘The first thing in the morning, everyone closed it — you can’t give money to anyone right now,'” Vedomosti reports

If this is true, and looking at the rest of the news I see coming out of Russia? If they do execute a disciplined fiscal and monetary plan without pushing nuclear placement cards around on the table … I’m thinking that they might be able to crawl outta that hole in about 8 years.  And that’s if the measures are exceedingly disciplined and painstakingly executed.  I wouldn’t touch RSX with a ten foot pole.

In fact, I don’t want to touch any risk here at the moment, and I’m thanking heaven that I lightened my book up so much by going to cash.

Hope you have some US. Bonds, or quality bond exposed instruments.

Again.

Whatever happened to the crowd that warned us that Russia was going to “dump” the Dollar?  Where are you guys at?  Hmmm?

Oh, and by the way, I cannot possibly see us having an interest rate hike in 2015.  As things stand now (and they are apt to change, I’m a non-linear guy), an interest rate hike in the first half of 2015 is completely off the table.  We’ll have to see about the second half, but I’m not optimistic …


Disclosure:
  I am long a variety of bond exposed instruments across the curve in every portfolio that I manage.

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