SPX sell off as I predicted, but still Long
It was profit taking day for Market Makers (MM). As I noted in my previous publish on SPX that this would occur in January, but it came sooner than I thought. Is the selloff over? I don't know. For now we have support at SPX 3222 and next line of support is 3200, plus Dow Gap acted as support today. Somewhere the MM will buy and we go higher. I trimmed my longs as noted in my previous publish by 50% in anticipation of this selloff, so if this is all there is then I still have some longs, but if we go down more I have cash aside to buy the dip. Repo continues, so it will act as a floor to the selloff somewhere. Target Dow 30K, and that would put SPX somewhere near 3400. Why we going up more? It appears the Fed and Trump is on the same page. Every bad news had been thrown at this market, and it keeps going up. Rate cuts, Fed Repo, Plus 2020 is reelection year and Trump wants the market up for reelection. The market being up acts as an illusion that everything is ok - The Wealth Effect. People with fat 401K feel better so they spend, and people not in market see market is up so everything must be ok so they spend. Who stated this "Wealth Effect"? It was Ben Bernanke Fed Chairman of the FED who stated the "Wealth Effect" when Fed was embarking on one of the biggest FED pump during the 2008 Financial Crisis, and then you know rest of the history of the largest bull market run in history.
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