For a sufficient inflation surge, gas buddy should drop to $3.20 and rise to $3.60 or $0.40 in order to push inflation into the Fed taper zone. For now gas buddy keeps dropping as economy is weak. Don’t expect a taper until next year as the Fed considers inflation and growth too low. If gas buddy keeps falling the next 2 months, the ‘spring’ should be coiled for next year.

However, a SPY bounce strategy can work until then. SPY bottoms out 5-8 days after Fed minutes are announced: Feb 25 (20), Apr 18 (10), and Aug 27 (21). The market runs up from just after the minutes to the Fed meeting. Since June, taper worries cause the market to fall after every meeting.

On Oct 9, the Fed minutes are announced.  Between Oct 14-17, SPY bottoms out. It will fall below the daily Bollinger Band and re-enter the Bollinger Band around 165-166. As the debt limit is resolved and the Fed meeting on Oct 30 takes place, SPY rises. The best time to sell will be Oct 30 or 31 whichever is the ‘up’ day.

November should see another stock swoon as 2009-2012 shows. End of November (Nov 26-29) will be another opportunity to buy SPY again selling on the Fed Mtg Dec 18/19. Jan may provide another swoon again until the gas buddy ‘surge’ is seen like Feb of this year. An inflation surge is not good for SPY.  Feb of this year saw a flat return for SPY.

Taper worries continue as you can see below. This works well with the above strategy.  I say no taper until March or May meeting next year!

Possibility of taper in October: senior Fed official
MENAFN – AFP – 20/09/2013

(MENAFN – AFP) A senior Federal Reserve official said Friday that there is a possibility of cutting the Fed’s stimulus in October, if economic data improves significantly.

Speaking two days after the Federal Open Market Committee shocked expectant markets by not reducing its 85 billion a month stimulus, FOMC member James Bullard said the beginning of the “taper” could still come this year.