As I often will do, I wandered off a bit today, while posting on my trade in KOLD... with the point being necessary, as linking the specific back to context... and seeking to see the context... as others seek to prevent you seeing it...
So, whether you care about the gas trade or not... the elements in the context are still relevant to the rest ?
The SPY chart surrendered today... much as the gas trade surrendered yesterday... Only in SPY, the surrender that occurred was in the purposeful falsity of posturing a big bolly pinch, suggesting big moves coming... versus the reality of the SPY being pinned to the center band... suspended half way between the December peak at 480 and the February lows at 410. The suddenly smoothed out move today narrowing that perception to a reduced band between 435 and 460... The ROC's at the bottom of the chart say it probably should be down at 420... but, its not... so if the ROCs move higher again... so will SPY... The red Chandelier Exit Short spiking now... will have optimists believe it means "higher"... but, it's likely only justifying the range now is being narrowed... limited to 435 to 460... with "more" awaiting further development of feature in directional indicators...
Relating the points in the KOLD post... to SPY... where it "should be" is a parallel function of those many things... and their proper (or not) perception... including... how much money there is now... and how much there will be in, say, 40 to 60 days from now... or, alternatively, how much money there is being perceived now... and how much might be perceived as existing in the next interval of time that is being perceived...
And, then, complexity ensues... in differences between perception and reality... and in the esoteric concern with things like velocity... and how it changes under changing perceptions...
QE pinned velocity into a vortex... approaching its dimensional limits at zero... under a belief it can't go below 1 since every new dollar added to the pile is a 1. Only, the post release dynamic is not constrained by the act of creation... so a fundamental flaw in the conceptualization (and computation) of velocity focused on the creation event... more than focused on it as a dynamic occurring beyond... The Fed's take on the mystery of Big Bang theory versus an expanding universe hypothesis not withstanding... It is that which the creation of QE sought to exploit by allowing the creation of money (originally intended only for use as a filler for the black holes in banks balance sheets) ... but while disallowing its movement.
QE made too much money... and not enough movement...
Inflation will make too much money... and too much movement...
And, somewhere in the transition between them... the compression factor applied in limiting the people's perception of the extent of the universe... will prove that the varying opinions of physicists... can have no impact in constraining the reality of expansion... is a truth that also applies in finance.
But, in physical realty... the logical conundrums of physicists... have no meaningful impact on others... Whether the universe will continue expanding, forever... or may reverse into an opposite event in some billions of years... will not alter your choice of where to eat, and what to have for lunch today.
In finance, however, error in perception versus the reality in scope and scale, in function, or in expansion versus contraction... is per se, the difference between per se, and brown bagging it... for the next decade.
Remaining is only the parsing of the transition... from too much money and not enough movement, with not enough perception of reality... to a growing perception of the prior lack of perception... paired with sudden recognition that... not this, but that... Perhaps generating some "and the world stood still"... moments... as what is... suddenly is not... and what is not... suddenly is... as means... either the world is spinning the other way than we thought it was... or I'm facing south when I thought I was facing north ?
And, all of this I have discussed as the inevitable... as the MOPE of inflation being transitory... can't work... when the reality they want you to believe... isn't reality.... and reality is insistent on reasserting itself...
That doesn't answer... what will people do... as "correction" occurs ?
And, as the issues are not limited to "I was wrong"... but "you misled me"... the recriminations matter...
But, they don't alter the expansion of the universe... only the perception if it...
In SPY, today... perception of the extent of the bubble in space narrowed slightly... much as it did in the third week of February, and again in the third week of March... but in a slightly tighter pinch, now... yet, requiring some number of days, still, before any change in perception is likely to result from that rolling reversal in a mean reversion from contraction to expansion...
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