Didn't Miss Much

That was about as well timed a break as I can remember.  Quite the flat and uninteresting market.  Maybe that changes with Yellen at Jackson Hole, but she probably will be noncommittal considering that the presidential election is less than 3 months away.  And you can bet that she will do anything to favor Clinton for the White House.  The smart money knows this so it is a free Fed put for the bulls till the election.

You have seen institutions and hedge funds slowly add equity exposure, and most of the shorts have already been taken to the cleaners so they are out of the way, so you don't see rapid rises, but also you have a lot of funds that want to add more equities on a pullback, and they haven't had much opportunity, so even a minor pullback of 0.5% in the SPX brings in a bunch of sideline cash.

This will eventually end badly, but people were saying the same thing in late 2006 and that bull market had another 6 months left in it.  But really, we are living in unprecedented times.  There has never been a bond market with negative rates or so much global QE.  The central banks have gone to the extreme and the repercussions are unknown because it is the first time in the history of mankind.

But from what I fear, the volatility genie is being kept in a bottle by central banks until the pressure builds up too much in the financial system causing an financial explosion.  Of course, the central banks will try to bandage over the next mess with the same insane policies hoping for a different result.  All that leads is to controlled bond market with ultra low rates and a stock market that suffers from low volume and inactivity.  A great stagnation.  That is probably the equilibrium point for this financial experiment.  At that point, it will be time to retire from trading.  I think we are getting a preview of that stagnation this month, as the stock market is about as boring as it gets.

Short term, we should pullback, and upside is limited, but I said that over 2 weeks ago, and we are still sitting here, right near all time highs with very low volatility.  Sticking with the pullback prediction, but not a whole lot of conviction, with the Fed probably status quo till elections are over.