An Opp For The Bears?

First, the answer is emphatically, NO. This is not 1999.

Thursday’s action might give the bears some ammunition, at least for a mild pullback or pause. Let’s look at the S&P 400 below. Similar to what happened in mid-April, there was a rejection in price at new highs. 3750 becomes a loose line in the sand for the bears to defend on the upside.

Similarly, the Russell 2000 below also saw price rejection at new highs. Just below 2900 becomes its loose line in the sand.

Now, given all that, pre-market action has the bulls right back in charge after more indications of peace with Iran as well as the employment looking like Goldilocks.

Still, all is not hunky dory and it hasn’t been. While our leveraged, aggressive went from negative to neutral to positive, our intermediate-term ones do not like this rally. Besides semiconductors partying, my other key sectors look crummy. Additionally, high yield bonds are lagging on a number of fronts. Lots of crosscurrents that need to square which explains the high level of activity in some of our models.

One theme has been consistent in our Unloved Gems stock portfolio. We prune position size in stocks that melt up, like INTC, MRNA and SLB. We planted more in high conviction companies that have pulled back, like XOM, SBUX and CHD. I am crummy at chasing so when you ask me about SNDK, QCOM, AMD and MU, I don’t have an answer. Risk is too high for me, even though they may go a lot further, just not with our money.

Looking forward to being around this weekend. My wife got her first set of new golf clubs so she’s invoking Anika Sorenstam, Lorena Ochoa, etc. I am hoping to play golf if Ma Nature cooperates. Sunday is Mothers Day and our family typically hosts all secular and religious holidays. Looks like brunch this year.

On Tuesday we bought more MQQQ, more QLD, more PFE, more CHD and more V. We sold RYTNX, EMB and some JNK. On Wednesday we bought HYG, PCY, EMB and GDX. We sold some QLD and some INTC. On Thursday we bought RYTNX, XOP, more QQEW, more SBUX and more XOM. We sold QLD, XLB, some RMQHX, some MQQQ, some SPHB and some QQQ.