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To: RetiredNow who wrote (108430)	3/31/2018 11:11:17 AM
From: Rarebird	Read Replies (3) \| Respond to of 116823

I see a potential double bottom on the S&P. As for technology, there have been numerous sell offs over the course of this bull market, and the sector has come back to hit new highs. I always keep an open mind and am flexible. That is what I am all about. I don't box myself into a corner and remain a prisoner or slave to ideology, whether it is market related or politically related. The next 2 weeks are extremely bullish in regard to money flows, due to massive inflows from IRA and 401K contributions. If the US stock market were to fall during this period of time, I would become an immediate believer in the Morgan Stanley thesis of QT you posted. Considering the magnitude of the gains, I don't see the sell off in tech to be alarming. The Nasdaq rebounded from the initial decline to hit new all time highs and then declined to hit a higher low. What I see in the Nasdaq is higher highs and higher lows. Moreover, the Vix hit a much lower low on March 23 than it did in February when the SPX retested its 200 DAY EMA. The Fed has made it clear that if economic conditions deteriorated they would lower the Fed Funds rate and reinvest securities. I am aware that the Fed plan is to drain 50 billion in bank reserves per month by September 2018 and that could cause problems. Reducing liquidity and raising interest rates could destroy the bull. The Fed has so far reduced its balance sheet by 91 billion. The biggest drawdown came between 2/14 and 2/28 when 41 billion vanished. The stock market correction started more than 2 weeks before that and ended before the big drawdown. I wonder if there was any connection or if news of the big reduction had leaked ahead of time. The big question, of course, is how long will it take before the tightening takes effect. Fed funds is still stimulative; that is to say, the current rate is trading below the inflation rate. Typically, Fed funds trades about 1.25% above the year over year change in core CPI. Typically, the market is up a little over 10% during a full rate tightening cycle. The exception is when tightening goes to far and an inverted yield curve results. But from the moment the yield curve inverts, it takes 21 months before a recession comes about. So, an inverted yield curve does not represent a short term or even intermediate term sell signal. The market continues to rise when there is an inverted yield curve. The key is to get out in time. It is all about timing.