Let me start off by sharing these high energy and fun segments from my visits to Fox Business and Yahoo.
Market bottom coming. No recession.
Consumer psyche already damaged as inflation peaks.
Stocks have certainly rocketed off the lows from last Monday, precisely in the window of opportunity I wrote about for almost two months. I know I was crystal clear when I said that the February 24th bottom looked like the secondary and more important bottom from the January 24th one, but I just wanted to get to Fed week so a major issue of uncertainty could be removed. And it was removed alright.
All quarter I have opined that the stock market correction was not about Russia/Ukraine or any other geopolitical issue. It was 80% the Fed and only 20% everything else. I pushed that hard in all of my media conversations and was firm that investors had their eyes on the wrong ball. You could see that in just how fierce the rally was last week and how many bears were forced to cover and run.
Instead of the three straight 1%+ rally days I discussed on Friday, we now have four straight. That has only happened a handful of times and the implications are very positive over the ensuing year. Let me repeat that it’s over the next 12 months, not 12 hours or 12 days. It’s powerful momentum and that provides a good backdrop to buy weakness in the range of 4100-4300 on the S&P 500 and 32,500 to 33,500 on the Dow Industrials. And yes, it’s bullish for the NASDAQ 100 as well, even more so.
So the question I will get here is that do we do right now. Do we just blindly buy the stock market? Go all in? I don’t think that is necessarily the right approach. In fact, our models are not loving the behavior in the short-term. It registers as too far up too fast. Now, if momentum is even stronger than I think, the market will blow right through our models’ warning and not stop. That’s always possible. However, I think the prudent plan is to reduce exposure where appropriate and that exactly what we have done. In fact, some of really aggressive models have gone net short to varying degrees, but those can and do change on a daily basis.
On Friday we bought SARK and levered inverse positions in the NDX and Russell 2000.
