After June FMtg, SPY rebounded quickly as there was no Fed Rate Rise. The July 27 meeting also had no rate rise, so we wait for the next Fed Meeting Sep 21 (cash positions). As ccpi is 2.23, they can’t keep delaying it. So Sep 21 should be the rate rise as FPCs occur in Sep.

The plan is to short SPY on Oct 3 following the Fed Mtg when SPY RHA and the Fed has executed a rate rise. See Dec/Jan this year after Fed Rate Rise in December when the greatest crash occured in the first 2 weeks of the following month (Jan).

Dec-Feb 2016:

Plan is to hold through the election until Nov. 15-18. SPY short is favored over TLT long until SPY falls 20% as the bond market expects rising rates until then.  On the first SPY GHA after the election, sell the shorts.

In 2008 (same ccpi enviornment), note that after a fed rate rise in Sep, the greatest crash occurs in the first 2 weeks of the following month (Oct). From Oct 1 at 98, SPY fell to 66 by November, a -33%. You would’ve missed only 5 points (103 to 98) but received the lion share of the fall.

2008 Sep-Nov period below…

On Nov 17 (CPI announced at 0830) check that CCPI > 2.0 and TLT GHA, if so buy TLT.  Sell TLT before Dec Fed Meeting. This would be the greatest TLT run this year!

If ccpi < 2.0, hold off in cash for Jan. TLT may still go up if ccpi will be under 2.0 but I prefer not to buy tlt when ccpi < 2.0. In 2008 and 2011, ccpi was 2.0+ and remained high.  Both years had the best runs for TLT.  When ccpi below 2.0, TLT has lacklustre performance over 1-2 mo time frames.

Next year on Jan 2, SPY long will be the new position as the Fed will announce new policy in Dec (most likely 50bps drop).

It’s all about the Fed Policy Change (FPC): Jan, Jun or Sep!

2010 Sep QE, ccpi 1.0

2011 Sep Twist, ccpi 2.0

2012 Sep QE starts, ccpi 1.9

2013 Jan QE starts, Jun Taper announced, Sep debt crisis starts

2014 Jan Taper Begins, ccpi < 2.0

2015 Jan Taper off

2016 Jan Int Rate Rise, ccpi > 2.0

The slave predicts….the king reacts.