Market Briefing For Thursday, Mach 16

Prepping for a rally testing the highs for over a week, as we signaled a healthy market consolidation just waiting to get past the Fed's universally expected rate hike (the variance being I was confident of a favorable S&P response), there was a reasonable satisfaction at market behavior.

Yes, Chair Yellen not putting her finger on a 'hair trigger' quite aggressively (language about the 'pace' of hikes) is the common explanation. However it was pretty clear the Fed is prepared for additional hikes as 'accommodation' becomes less justifiable (rates at essentially artificially low levels) should we actually get the kind of economic strength they essentially 'spin' for now.

The 'spin' is because they're already behind the Curve to a degree because inflation is evolving while economic activity is generally sluggish (presented 'as if' it was stronger because they need to in order to achieve their goal) at the time time she is not a 'political wrecking-ball' for the Administration as a few have suggested. We never believed that and thought the Fed needed a rate move simply to get-off emergency levels and do to global pressures.

At the same time, the stock market had remained strong outside of Oil; so I warned NOT to short Oil; but look for it to kick-in with a rebound, and if we'd get that, well, no problem getting the NASDAQ to new highs and initiating a secondary test of the S&P 2400 plus preceding highs after another forecast rally; that being the one expected if Trump called for 'unity' at the big speech which he did, again trapping the moaning bears yet-again.

Now, no doubt there's a 'real' correction coming and short-interest is lower, as I noted last evening. Meanwhile we run-in shorts that are out there after warning against shorting and against bearish option strategies; continuously since just before Election Day, when I opined few would believe how bullish I'd be if 'The Donald' carried the day.

I think they believe it now, but most did not embrace the rotational nature of the move we talked about right away in early November; and that was shifts into old cyclical and basic industrial stocks that were dormant for years, or in 'bear markets' of their own. This matters because it impacts where we are at this point-in-time. Many money managers failed, or reluctantly climbed-onto the market's bandwagon, and had lots of trouble adjusting portfolios quickly so as to reflect the new reality. That means that they are still out-of-whack a bit, and perhaps is part of why so many constantly call for a market retreat.

Is President Trump doing everything right? Nope. Is the media continuing to unfairly address some subjects, or 'work them into' a dialogue that clearly is trying to sway viewers by implicitly leaning toward bias? Sure. Is there risk a real scandal erupts from rising circumstantial inferences (if not real factual evidence), that has an impact on the markets as some point. Yes. However, while holding longs from the lows and not chasing strength we calmly have sailed through the 'Ides of March' and suspected the modern Brutus(es) out there would not bring down the market by their vitriolic pleading for decline.

Bottom-line: We forewarned traders NOT to short or fade this market even as we anticipated a pullback after the Speech to Congress. And during the consolidation we called for preparation to spur the market to a test of highs immediately in the wake of the Fed's decision; expected to be what it was.