Down, then up, then up some more. That’s all you need to know.

The stock market will mirror the economy with a three-month lag, as it always does.

That calls for a 10% correction in stocks from the recent $2100 peak going into the summer, then a monster rally to new highs going into the end of the year.

Certainly the 200-day moving average in the (SPY) at $199.75 is crying out for attention. Below that you can target the previous breakout level of $192.50, and that nearly gets you to your 10% hickey.

That means you should be buying gold right about now to hedge your existing long positions in equities.

Remember “Sell in May and Go Away”? I have bad news for you. It’s May 2.

Why should stocks sell off right now? There are a plethora of reasons.

We are just entering the worst six months of the year to own equities. Buy stocks every May and sell them every October and your return on equities for the past 60 years has been zero, despite the indexes going up several thousand percent.

Stocks at a 19X price earnings multiple are at the top end of its historic 9-24X range. Buy high and sell higher? I’ll leave that one to you.

As traders entertain a June rate hike by the Fed, the dollar (UUP) is about to strengthen. This is always terrible news for large US multinationals.

Several large hedge funds are going bust, dumping large amounts of stock on the market. That’s why the Japanese yen has been so strong this week. They’re covering their shorts.

A Q1 mini recession has become a regular feature of the US economy, the aftermath of maxed out credit cards during the holiday shopping season and delayed starts to New Year corporate capital spending programs.

The economy then bounces back hard for the remaining three quarters, but the data won’t show this definitively for 3-6 more months. That’s sets up the annual cycle for the movement of all asset classes which we have learned to both love and hate.

And while QE is gone and dead in the US, it continues full speed ahead in Europe, Japan, and China, which account for 35% of the planet’s GDP.

Therefore, the American stocks that look expensive now at a 19X price earnings multiple become fairly priced in three months, and a bargain in six.

How far in advance do you want to front run the attractive valuations?

In addition, you have to consider the harsh reality that there is absolutely nothing else to buy. US 30 year Treasury bonds with a 2.69% yield? German 10 year bunds at 0.27%? Japanese government bonds at -0.11%. Not a lot to choose from.

How about collectable French postage stamps? Beanie babies anyone?

The fact is that EQUITIES HAVE BECOME THE HIGH YIELD INSTRUMENTS OF OUR DAY.

You can get 2.10% for the S&P 500, and much more for damaged names like AT&T (T) (5.04%), Altria Group (MO)(3.68%), Chevron (CVX)(4.18%), and Verizon Communications (VZ)(4.52%).

The world is still on a giant paper chase, as it has been for the last seven years. The only difference now is that we are shifting from fixed income to equity script.

So when we get our 10% summer correction, you have to jump in with both hands and buy as much stock as you can.

This year is special in that we are likely to get a presidential election that is equity positive. We may even have a shot at an end of congressional deadlock, which would open the fiscal spending floodgates.

I’ll let you guess which result delivers that.

Stocks are almost certainly flying to new all times highs going into the end of 2016. I’m looking for at least a $220 print, a gain of 6.8% from here. If you cash out now, you’ll be kicking yourself around the Christmas tree.

Newbie traders working without the benefit of the Mad Hedge Fund Trader will end up selling every bottom, buying every top, and then wonder where all their money went.

If you are an elderly retiree, or just a plain wimp, and don’t want to trade these big moves, just take a long cruise. You will find share prices pleasantly higher at the end of 2016, and wonder what all the fuss was about.

I recommend the Cunard World Cruise (click here for the link). You can use my regular owner’s suite.

See You in December