For those of you who haven't looked over my study from January 16th, it is a good place to start.
What we have seen since January 16th is test and minor retest of the trajectory, which has predictably resulted in a convincing rally for all major market averages.
Below is my opinion on the S&P 500 going forward:
click chart to enlarge
The restest of the lows that should occur somewhere in the summer/early fall is a high probability event given both technical, seasonal and macro factors. It should also be noted that the retest has an outside possibility of turning into something more than a retest, which would ultimately resolve around the 1760-1800 level.
The situation has the potential to be perilous enough that I have been reviewing various ways to hedge our long exposure coming April/May for the first time in years. I will likely put together a combination of hedges that I will be posting here when I decide to initiate them.
I have always been a believer in markets having an inherent tendency towards devious intention. It is rare that a market will witness an open wound among an influential, highly-publicized group in the market without rubbing salt in that wound, while ultimately seeking complete amputation of the limb as the end punishment.
Given the fact the market now has its foot on the neck of so many prominent hedge fund managers through devastating results in 2015 followed by equally devastating results to start 2016, a devastating kill move likely remains in the offing. There is simply too much of an opportunity for the market to create the type of loathsome, highly publicized respect it seeks on a frequent basis by finishing what it has started in the hedge fund space via systematic violence in the months ahead.
