Uncertain times

Because of the significant uncertainty in the market I would prefer to be out completely and wait. Here are the data: Fed action is extremely stimulative. Think about it - Fed is guaranteeing a bull market for treasury. That should make borrowing much easier for everyone. If we had a bull market in stocks then people would be borrowing money to get into stocks. But since we have just gone through a brutal bear market in stock, very few people are courageous to borrow to invest in stocks. Now, regular companies will borrow at lower rates to either buy back their shares or improve their plant or services. But there is significant deterrence for that too - demand has dried up. So, in the present macro conditions it is hard to predict the real consequences of the Fed's action on Wednesday. Market action is also directionless. Volume dries up quickly in either direction. That means there is no conviction either in bears or in bulls. The volume in the upward move of the last two weeks have been impressive. And the volume in the last two days of down movement have been OK but conflicting - the volume on the second day was far less than the volume on the first down day even though we had 4-witching on Friday. You normally expect larger volume on 4-witching days. That would foretell that downward movement is limited right now. But a sustained upward movement is blocked by the macro conditions. There are no safe places (except maybe between about 825 and 900 on SP500). So, I would prefer to wait in Cash to wait for an upward move or a decisive downward move or new downbeat news. My current standing order of selling remaining SSO (market long) is sitting at roughly 4% below current value which will be reached if SPY goes down 2%. I will leave the order as is. If I get kicked out of the market I will then think about whether to go short or not or stay in Cash and look for an entry point. Macro dialogue on SP500: From where we stand buying 3 mo 850 calls may work out better or even 6mo 700 puts may be OK too. I don't think market will remain at the present value too long since there is neither a support nor a resistance nearby. Its a no man's land. People think SP500 should be 800*12PE/18PE = 530 based on 12 PE. See more detailed projections in the links under Portfolio and Transactions section on the left panel. The long term average is 14PE which would make SP500 to be 620. Even these may be too high estimates since the earning may come down more than expected (a likely scenario).