The economic woes of the world haven't changed much in a year, they are just ever so slightly worse. The benefit we have is that at this point is that we've done it all before. We even have schedules and specific dates to guide us this time around. We know that operation twist comes to an end in June. We know that on April 16-17th North Korea will try to launch a test missile, and we know that the US will breach the debt ceiling before the November elections. My timeline is as follows:
Now -> mid May: Rally mode, possible QE3 anouncements/hints, possible N Korea scares which may have effect on select commodities.
Mid May -> August: The emergence of QE3 announcement if it is going to happen. I expect mediocre economic data. We can rally on QE3 or dip some without it.
August -> December: This is where we bring the pain. Debt ceiling will be breached at latest in October, republicans will not be any help in getting a debt ceiling raise to pass because they have an election to win. Country is likely to be more divided than ever. Even with QE3, I think any rally dives for a moment during elections and debt ceiling breach.
Based on this timeline i'll hold on gold and oil for the time being. Upon emergence of QE3, i'll continue holding my gold and oil positions. Without it i'll begin the VIX all in. When September rolls around i'll begin shorting financials again if we already aren't in avalanche mode because of the lack of QE.
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