- The Federal Reserve gave a very blunt warning about the possibility for risk assets to lose money soon.
- The Fed's Financial Stability Report points to several major risks that it is trying to mitigate, including valuations, China and potential higher interest rates.
- The chief risk is the Fed itself, however, which in conjunction with the Treasury is reducing liquidity to markets.
- The S&P 500 and Nasdaq 100 are both overbought again on longer-term Relative Strength Index and both are showing negative divergences on Money Flow.
- It's time to sell the large-cap indexes to focus elsewhere and hold some dry powder in cash.
For further details see:
The Fed Warned You, Are You Going To Fight The Fed?