Denial isn’t a river in Egypt – as I’ve contended for so many months while an evident distribution ‘under cover of a Dow and S&P umbrellas’ dominated, while insiders and others were systematically selling (and we were shorting) rallies all year long; and generally quite successfully as well. Now the drama magnitude, after running-into a ‘brick-wall of resistance’ as soon as gains could be sold in a new tax year, has turned temblors into essentially an eye-opening earthquake. 

Backing off ‘financial engineering’ – that lifted financial-asset-focused yachts; but barely the Middle Class dinghy’s much less small cruisers; I’ve called this a ‘Controlled Depression’ (Fed facilitating the control by circuitous funding ‘the Street’ equity levitation amid an historic yield-chasing that we long cautioned all investors to be careful about lest they forget about the return ‘of’ their money in a quest for a better return ‘on’ their money) for quite some time. 

In 2015, aside the discussions about constant distribution under cover of a firm S&P or Dow Industrials, we thought it was superficially covering the use of rally periods to distribute shares to weaker holders; or to flat-out raise cash, which is what we suggest. Frankly a large part of the ongoing buybacks were viewed as a strategy to impress shareholders with artificially-boosted earnings (lower float of course), while insiders often used the equity lifts in the wake of buybacks for selling (in-essence executive compensation) with shareholders often carrying a lot more debt through bond offerings. Regardless, all part of distribution.

This summary (mostly for new members) is important; because many pundits in ‘fantasy-land’ pretend the recent rapid decline is ‘shocking, unexpected, or just China-based’, or other excuses they can find, other than observing correlation between reality-check facts I noted throughout 2015 of earnings or GDP growth steadily being ratcheted-down by the Fed (like Atlanta ‘Now’) or even the IMF. 

We’ve noted that the market started losing traction as soon as the Fed starting ‘tapering’ (simply less stimulus) without waiting for the Funds rate hike (frosting on the cake); which became merely what the public sees as monetary policy; a transition we assessed as the actual ‘snugging up’ beginning months earlier. 

In a similar vain, the preponderance of analysts saying this is a normal needed correction in 2016 typically omit it’s seeding really in the Spring and Summer of last year (if not earlier for some sectors, including Energy). They try avoiding a discussion of the number of stocks under their 200-Day Moving Averages even before the near-term bottoms fell out of the S&P; and certainly don’t focus as I have been prone to, on the New York Composite, which has been below crucial August and September lows for awhile now.