Strawberry Blonde's Market Summary: SPX: Where Are We Now?

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Monday, December 06, 2021

SPX: Where Are We Now?

* See UPDATES below...

I recently wrote about the SPX and SPX:VIX ratio here.

In it, I mentioned that, "Volatility is rising and is fraught with large-scale whipsaw action...expect this to continue for the near future."

Take a look at the following graphic.

Now compare it to the following monthly chart of the SPX.

I don't think anyone could be faulted if they labelled the SPX as being in the beginning of the "Blowoff Phase" (noted on the graphic) at or near the top of this extremely overextended long-term bull run...with "Public Money" most at risk.

The price has spiked far above the channel "mean" since it last touched it in May of 2020, and it will return at some point.

If so, and, as inflation continues to rise, look for volatility to continue into 2022 and watch for the "Smart Money" and "Institutional Investors" to divest themselves of high-risk assets (growth sectors), take profits, and hold cash for awhile, before rotating back into value sectors.

Perhaps Elon Musk had similar ideas when he sold some of his TSLA shares recently.

This link to Insiders Buying and Selling may provide such insight...as well as this link.

BUT, don't just take my word for it...someone else is predicting a blow-off to levels much lower than anticipated (article below)..."yowza" indeed.

And, as noted on the monthly chart above, the SPX channel "mean" is around 3200 at the moment, so a reversion to that level would wipe out gains from the past year and a half...who's prepared for that!

Source: ZeroHedge

ZeroHedge excerpt

* UPDATE December 10...

The true cost of Biden's "Build Back Better" bill is exposed: it's "...shameless...patently absurd...mind bending logic..." to say that it's free.

Source: ZeroHedge

ZeroHedge excerpt

And, with inflation running at 40-year highs (CPI = 8% m/m and 6.8% YoY...real inflation is up around 15% this year over last year), passage of this bill would cripple low and middle-income American taxpayers for a very long time.