Is a Major Stock Market Correction Now at Hand?

The S&P500 Index (SPX) is once again flirting with its 20 day moving average which has defined underlying support for the SPX since the current rally began with the Trump election victory. The SPX has not had consecutive daily closes below its 20 dma (the blue line in the following chart) since early November; it has touched its 20 dma numerous times but closed below it only once. The pattern continued last week when the SPX rebounded after trading just below its 20 dma on Thursday.

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U.S. Treasury Headed for Disaster?

On Wednesday of this week, the U.S. has a debt ceiling again. Since the deal between Speaker John Boehner and President Obama in October of 2015, the debt ceiling has been suspended, allowing the President to borrow as much as he wanted. Not anymore. Now the Treasury will be limited to borrowing no more than what is outstanding on March 15th, approximately $20 trillion, unless Congress ups the limit.

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The Trump Narrative Is Dying (as I Predicted)

Remember what the Trump story is all about? His policies will drive economic growth higher, inflation will rise, the Fed will need to raise rates faster and the dollar will soar. To see the story, all you had to do was look at short-term U.S. interest rates which were climbing fast after years of stagnation and deflation worries under Obama. That’s why the Trump trade is also known as the inflation trade. Buy stocks and the dollar and sell bonds and gold because bond yields are going higher.

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