The S&P 500 is up 8% on the un-abating bounce off the lows in the 2nd week of February. Were you able to participate or were you too scared?
Regular readers will recall that I suspected we could see action like what has occurred in my previous post. That’s 2 for 2 in my last two major market calls. Don’t get used to that sort of accuracy. Right now I’m in a zone. Regular speculators understand that zone. Sometimes you get in it and you take on risk, fitting moves together as if breezing through a Rubik’s Cube. These times are fleeting though as the HFT shops will be sure to remove any edge you perceive yourself as having and cold water will be splashed on my zone. Make hay while the sun shines.
I suspect the current bounce has utilized most of its positive energy and the market will need to take a little break. It doesn’t necessarily need to correct but just work off some of the speculative energy that has driven its 8% gain over the last month. If I had to guess, I think we see about 7 weeks of sideways consolidation and then a catalyst at the end of May or beginning of June will present itself to drive the S&P 500 back up to the old highs.
Don’t discount the positive effects of the ECB’s expansion of it’s QE process. The TLRTOs have been released for potential use in investment grade assets plus they’re able to plug another €250 billion annually in the EU on top of current output. The media creates narratives with potential false attributions so be careful how you position your capital. Don’t be a sucker and necessarily fall for all the misleading accounts of spurious correlations like oil and short covering which were the du-jour narratives last week.
In stale and tired fashion, I want to reiterate that I believe we are currently in a topping process which began last October. That doesn’t mean that we can’t see new highs on the S&P 500, so for longer term capital it still would probably behoove you to significantly liquidate in preparation. But if you fashion yourself a trader, there’s potentially still money to be made opening new long positions.
Lastly, gold related equities have just been playing in another universe in relation to any other sector since the start of 2016. One of the stocks from the J-perp Watchlist is up 600% over the last 9 months. Have a read of the original post and the portfolio update page for more info.
Ignore that 600% nonsense from the previous paragraph. PLG had a reverse split that I somehow missed. The position is actually showing a loss and I have corrected the tracker to account for the reverse. PLG is on the watchlist, however, the actual J-perp portfolio has had a great run to start the year so go have a read anyways.